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Casual Articles - Will Your Business Make a Profit?
One thing all successful small business owners have in common is the knowledge that their business is based on enthusiastic customers. Despite their multi-tasking titles of bookkeeper, service provider and sales-manager, their most important title is Customer-Enthusiasm Guru.Your question, undoubtedly, is how do I find time in my unbelievably over-loaded schedule to become a customer-enthusiasm guru? Following are a few quick steps you can take to focus on your customer in everything you do:1. Evaluate your customer base. Who are your best customers and why? What similarities do they share? What are their core needs and how do you solve them? This step is important because every other task relates to your vision of these top customers.2. Keep the customer in mind. Before initiating new processes ask yourself how it will benefit your ideal customers. Whether you are implementing a new bookkeeping system or hiring help, kee
You'll need to make the following estimates and calculations when you prepare your break-even analysis:
Fixed costs. Fixed costs (sometimes called "overhead") don't vary much from month to month. They include rent, insurance, utilities and other set expenses. It's also a good idea to throw a little extra, say 10%, into your break-even analysis to cover miscellaneous expenses that you can't predict.
Sales revenue. This is the total dollars from sales activity that you bring into your business each month or year. To perform a valid break-even
There are a lot of change management issues at the top of any corporation and sometimes when there are many divisions with presidents we see all of them are vying for the chairmanship or presidency of the entire multinational conglomerate corporation. For instance let's look at General Electric under Jack Welch.Many of General Electric’s divisions such as their commercial credit division, their energy products division, their medical division and their plastics division all had top-notch management and in each of these upper echelons was a man or woman who was at the top of their game. Each of these individuals was qualified to run the entire General Electric Company after Jack Welch retired.Of course, Jack Welch and the Board of Directors had to hire one of them. Knowing that who ever they didn't hire would most likely leave the company and some headhunter would indeed make a huge commission to put them at the top of an
A startup business owner must understand that $5,000 of product sales will not cover $5,000 in monthly overhead expenses. The cost of selling $5,000 in retail goods could easily be $3,000 at the wholesale price, so the $5,000 in sales revenue only provides $2,000 in gross profit available for overhead costs. The break-even point is reached when revenue equals all business costs.
To calculate your break-even point you will need to identify your fixed and variable costs. Fixed costs are expenses that do not vary with sales volume, such as rent or administrative salaries. These costs have to be paid regardless of sales and are often referred to as overhead costs. Variable costs vary directly with the sales volume, such as the costs of purchasing inventory, shipping, or manufacturing a product. The formula for determining your break-even point requires no more than simple arithmetic.
Will Your Business Make Money?
Before you prepare a business plan, you should figure out if your business will break even. Figure out at what point you break even. How many sales until this event occurs?
How can you tell if your business idea will be profitable? The honest answer is, you can't. But this uncertainty shouldn't keep you from researching the financial soundness of your idea. Preparing what's known as a break-even analysis, as well as several other financial projections, can help you determine whether or not your business will succeed.
What a Break-Even Analysis Tells You
Your break-even analysis shows you the amount of revenue you'll need to bring in to cover your expenses before you make a dime of profit. If you can attain and surpass your break-even point -- that is, if you can easily bring in more than the amount of sales revenue you'll need to meet your expenses -- then your business stands a good chance of making money.
Many experienced entrepreneurs use a break-even analysis or forecast as a primary screening tool for new business ventures. They won't even write a complete business plan unless their break-even forecast shows that their projected sales revenue far exceeds their costs of doing business.
How to Prepare a Break-Even Analysis
To perform a break-even analysis, you'll have to make educated guesses about your expenses and revenues. Although you don't have a crystal ball, you should do some serious research -- including an analysis of your market - to determine your projected sales volume and your anticipated expenses. Your best bet is to invest in a do-it-yourself business plan product to learn how to make reasonable revenue and cost estimates.
You'll need to make the following estimates and calculations when you prepare your break-even analysis:
Fixed costs. Fixed costs (sometimes called "overhead") don't vary much from month to month. They include rent, insurance, utilities and other set expenses. It's also a good idea to throw a little extra, say 10%, into your break-even analysis to cover miscellaneous expenses that you can't predict.
Sales revenue. This is the total dollars from sales activity that you bring into your business each month or year. To perform a valid break-even
The number one problem most freelancers have is that their income is inconsistent. This makes it hard to plan. As a freelancer with some financial savvy, I've noticed some things that have helped me keep the debt monster at bay.NOTE: Notice I wrote "at bay"; I haven't completed escaped him, but he's not an all-consuming threat either.1. Get a job you hate: Why? A little story:Jerry Seinfeld said that he sold light bulbs before he became rich and famous. He said he hated it, but he did it because it made him work that much harder on his comedy. His thinking was, "The sooner I succeed, the sooner I could give up selling light bulbs.I thought this a brilliant concept.Moral of this story: Complacency kills and this is kinda like reverse psychology. Imagine if you hated what you were doing. You'd work much harder to not have to do it and put every penny you earned towards the debt you owe so
To calculate your break-even point you will need to identify your fixed and variable costs. Fixed costs are expenses that do not vary with sales volume, such as rent or administrative salaries. These costs have to be paid regardless of sales and are often referred to as overhead costs. Variable costs vary directly with the sales volume, such as the costs of purchasing inventory, shipping, or manufacturing a product. The formula for determining your break-even point requires no more than simple arithmetic.
Will Your Business Make Money?
Before you prepare a business plan, you should figure out if your business will break even. Figure out at what point you break even. How many sales until this event occurs?
How can you tell if your business idea will be profitable? The honest answer is, you can't. But this uncertainty shouldn't keep you from researching the financial soundness of your idea. Preparing what's known as a break-even analysis, as well as several other financial projections, can help you determine whether or not your business will succeed.
What a Break-Even Analysis Tells You
Your break-even analysis shows you the amount of revenue you'll need to bring in to cover your expenses before you make a dime of profit. If you can attain and surpass your break-even point -- that is, if you can easily bring in more than the amount of sales revenue you'll need to meet your expenses -- then your business stands a good chance of making money.
Many experienced entrepreneurs use a break-even analysis or forecast as a primary screening tool for new business ventures. They won't even write a complete business plan unless their break-even forecast shows that their projected sales revenue far exceeds their costs of doing business.
How to Prepare a Break-Even Analysis
To perform a break-even analysis, you'll have to make educated guesses about your expenses and revenues. Although you don't have a crystal ball, you should do some serious research -- including an analysis of your market - to determine your projected sales volume and your anticipated expenses. Your best bet is to invest in a do-it-yourself business plan product to learn how to make reasonable revenue and cost estimates.
You'll need to make the following estimates and calculations when you prepare your break-even analysis:
Fixed costs. Fixed costs (sometimes called "overhead") don't vary much from month to month. They include rent, insurance, utilities and other set expenses. It's also a good idea to throw a little extra, say 10%, into your break-even analysis to cover miscellaneous expenses that you can't predict.
Sales revenue. This is the total dollars from sales activity that you bring into your business each month or year. To perform a valid break-even
A company brochure is one of the basic tools in your marketing kit yet so many companies struggle to create an effective brochure that delivers a return on investment for the business.Recently I came across an excellent example of a company brochure developed by Alison Halupka, General Manager of Grant Sheds. Grant Sheds is a family owned business operating from Monash in South Australia. They manufacture and install a wide range of sheds and garages. It is a multi-million dollar business that has been operating for 50 years. Their clients are primarily farmers. Furthermore, through smart service and marketing Grant Sheds continues to earn a price premium in an increasingly commodities market. Their company brochure is one link in that chain.I see a lot of company brochures and most of them end up in my recycle bin before I even open the front page. The Grant Sheds brochure got my attention. I read it in its entirety and by t
What a Break-Even Analysis Tells You
Your break-even analysis shows you the amount of revenue you'll need to bring in to cover your expenses before you make a dime of profit. If you can attain and surpass your break-even point -- that is, if you can easily bring in more than the amount of sales revenue you'll need to meet your expenses -- then your business stands a good chance of making money.
Many experienced entrepreneurs use a break-even analysis or forecast as a primary screening tool for new business ventures. They won't even write a complete business plan unless their break-even forecast shows that their projected sales revenue far exceeds their costs of doing business.
How to Prepare a Break-Even Analysis
To perform a break-even analysis, you'll have to make educated guesses about your expenses and revenues. Although you don't have a crystal ball, you should do some serious research -- including an analysis of your market - to determine your projected sales volume and your anticipated expenses. Your best bet is to invest in a do-it-yourself business plan product to learn how to make reasonable revenue and cost estimates.
You'll need to make the following estimates and calculations when you prepare your break-even analysis:
Fixed costs. Fixed costs (sometimes called "overhead") don't vary much from month to month. They include rent, insurance, utilities and other set expenses. It's also a good idea to throw a little extra, say 10%, into your break-even analysis to cover miscellaneous expenses that you can't predict.
Sales revenue. This is the total dollars from sales activity that you bring into your business each month or year. To perform a valid break-even
In a sense, the entrance to SFGT is a window into the person who leads the company, Dudley Fitzpatrick, CEO. Open the big front door of the old town house on Walnut Street and the first thing you notice is three old stone steps. Couldn't they afford new steps? Then you see the second door. It's all glass and through it you see the modern reception room, the classic furniture, the attractive receptionist and the small oriental rug in the center of the beautiful wood floor. "I get it," you think to yourself.When you meet Dudley and chat with him, you really get it. He's a traditionalist, like the steps and the beams on the ceiling. He's confident and assertive, like the stately furniture and the offices themselves. He's tasteful, like the oriental rug and like the conference room on the fifth floor. You go there for the interview after a trip on the modern elevator.And Dudley's a trip.This is a man who knows where he's go
Many experienced entrepreneurs use a break-even analysis or forecast as a primary screening tool for new business ventures. They won't even write a complete business plan unless their break-even forecast shows that their projected sales revenue far exceeds their costs of doing business.
How to Prepare a Break-Even Analysis
To perform a break-even analysis, you'll have to make educated guesses about your expenses and revenues. Although you don't have a crystal ball, you should do some serious research -- including an analysis of your market - to determine your projected sales volume and your anticipated expenses. Your best bet is to invest in a do-it-yourself business plan product to learn how to make reasonable revenue and cost estimates.
You'll need to make the following estimates and calculations when you prepare your break-even analysis:
Fixed costs. Fixed costs (sometimes called "overhead") don't vary much from month to month. They include rent, insurance, utilities and other set expenses. It's also a good idea to throw a little extra, say 10%, into your break-even analysis to cover miscellaneous expenses that you can't predict.
Sales revenue. This is the total dollars from sales activity that you bring into your business each month or year. To perform a valid break-even
Heavy-duty office chairs offer comfort as well as extreme durability. Office chairs are an important part of the average office or cubicle. A good ergonomic office chair allows an employee to remain comfortable while sitting for a period of time. It is important that heavy-duty office chairs feature adjustable support mechanisms in order to offer comfort to a large variety of individual body types.Heavy-duty office chairs are typically a good choice for individuals that are large in stature. Most heavy-duty office chairs feature a solid frame that can support up to 400 pounds. They often feature a wider than average seat and back support. Thick, high-density seating foam provides comfort to the user.A quality heavy-duty office chair will feature a proper ergonomic design to help alleviate the added stress that is placed on the spine while sitting for a long time. Adjustable arm rests, and head, back, and lumbar support all
You'll need to make the following estimates and calculations when you prepare your break-even analysis:
Fixed costs. Fixed costs (sometimes called "overhead") don't vary much from month to month. They include rent, insurance, utilities and other set expenses. It's also a good idea to throw a little extra, say 10%, into your break-even analysis to cover miscellaneous expenses that you can't predict.
Sales revenue. This is the total dollars from sales activity that you bring into your business each month or year. To perform a valid break-even analysis, you must base your forecast on the volume of business you really expect -- not on how much you need to make a good profit.
Average gross profit for each sale. Average gross profit is the money left from each sales dollar after paying the direct costs of a sale. (Direct costs are what you pay to provide your product or service.) For example, if Amy pays an average of $100 for goods to make lingerie that she sells for an average of $300, her average gross profit is $200.
Average gross profit percentage. This percentage tells you how much of each dollar of sales income is gross profit. To calculate your average gross profit percentage, divide your average gross profit figure by the average selling price. For example, if Amy makes an average gross profit of $200 on lingerie that she sells for an average of $300, her gross profit percentage is 66.7% ($200 divided by $300).
Calculating Your Break-Even Point
Once you've calculated the numbers above, it's easy to figure out your break-even point. Simply divide your estimated annual fixed costs by your gross profit percentage to determine the amount of sales revenue you'll need to bring in just to break even. For example, if Amy has fixed costs of $6,000 per month, and her expected profit margin is 66.7%, her break-even point is $9,000 in sales revenue per month ($6,000 divided by .667). In other words, Amy must make $9,000 each month just to pay her fixed costs and her direct (product) costs. (This number does not include any profit, or even a salary for Amy.)
Don't Forgo a Break-Even Analysis
Although creating a break-even forecast might sound complicated, you owe it to yourself to prepare one as one of the first steps in your business planning process. As you can see, a realistically prepared break-even forecast will tell you whether your idea is a sure winner, a sure loser or, like most ideas, it needs modifications to make it work.
If You Can't Break Even
If your break-even point is higher than your expected revenues, you'll need to decide whether certain aspects of your plan can be changed to create an achievable break-even point. For instance, perhaps you can:
Find a less expensive source of supplies
- Do without an employee
- Save rent by working out of your home, or
- Sell your product or service at a higher price.
If you tinker with the numbers and your break-even sales revenue still seems like an unattainable number, you may need to scrap your business idea. If that's the case, take heart in the fact that you found out before you invested your (or someone elses) money in the idea.
Further Financial Analysis
If your break-even forecast shows you will make more revenue than you need to break even, you can consider
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