19. Break Even Analysis

By Roger Bryan

In your business plan, you need to explain the breakeven analysis accurately so that you can take pre-emptive measures to overtake breakeven situation in your business. To be frank, breakeven is not profitable to a commercial organization as it indicates the zero profit without inviting any loss. In this case, there will be no financial gain after selling the products and services to customers. Nor will there be any loss as well. The manufacturing cost and product sale will be equal.

In your business plan, you should mention various factors concerning the breakeven situation. You need to highlight the areas of fixed and variable costs. For instance, if you run a small sized book stall or kiosk or stationary stalls, you should buy products. If you purchase a set of spoons which have cost you $5 per set, it will be variable cost. You need to sell the product at different price rates.

In the breakeven analysis section, you must point out variable costs to analyze the breakeven condition. Unit price rate must be included in your business plan to highlight the breakeven analysis section. Unit price is the fixed selling price tag of the product. You will have to fix that price unit in your business plan.

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