Existing businesses can benefit from a break-even analysis, too. If your break-even analysis shows that it will take longer, you need to revisit your costs and pricing strategy so you can increase your margins and break even in a reasonable amount of time. In general, you should aim to break even in six to 18 months after launching your business. This will help you plan the amount of startup capital you’ll need and determine how long that capital will need to last. ![]() Financing sources will want to see when you expect to break even so they know when your business will become profitable.īut even if you’re not seeking outside financing, you should know when your business is going to break even. When Should You Use a Break-Even Analysis?Ī break-even analysis is a critical part of the financial projections in the business plan for a new business. To use this break-even analysis template, gather information about your business’s fixed and variable costs, as well as your 12-month sales forecast. Your business is “breaking even”-not making a profit but not losing money, either.Īfter the break-even point, any additional sales will generate profits. ![]() What is a break-even analysis? The break-even point is the point when your business’s total revenues equal its total expenses.
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