There are many unpredictable events that affect the ebbs and flows of a business. A negative economy, competition heating up, cash flow problems, partnership ending, etc… To help manage the predictable and the unpredictable, as a business owner, you can incorporate tools in your business that can give you a realistic, bottom line view of your business almost daily. Think of it as getting on a scale when you’re dieting. The truth is in the numbers.
I’m talking about creating and implementing a break-even plan. The break-even plan will help you determine what you need to sell, monthly or annually, to cover your costs of doing business–your break-even point. Using a break-even plan routinely allows you to compare sales to fixed and variable costs to determine how much sales will it take to cover costs. It requires averaging variable costs and unit prices over an entire business, and can be useful as you measure risks related to fixed and variable costs.
This type of plan will laser-focus you on where your company is bleeding and what it will take to break even. It will help you identify ways to lower overhead costs and expenses. If working the plan properly, you can get out of debt and discover why you are not more profitable.
While saving money in overhead, you can drive sales to cover your salary and other expenses needed to keep your business open. When you realistically know what your ‘costs of doing business’ are, you’ll then make more intelligent decisions around expenses and investments into your business.
An experience business coach can work with you to create a break-even plan and partner with you as you measure its results. And, as a scale will hold you accountable to your diet goals — so will a business coach to your business goals.