There's a lot more to breakeven analysis than calculating your breakeven sales. And you're not in business to breakeven - you're in it to make a profit and generate cash so this video takes things a bit further
I start with a refresher on calculating breakeven sales before showing showing how to calculate the level of sales required to make a target profit. This is a useful thing to understand in a business plan and for setting sales targets generally.
I then move on to calculating the additional sales you would require to cover an extra cost. In the example I show how it could be used to help decide whether you should move to a new business premises with a higher rent.
Finally I show you how to understand the impact of adjusting your gross profit margins on breakeven sales level. Obviously the higher your margins, the lower the level of sales required to breakeven or to generate a specific level of profit.
There's a whole bunch of things you can use breakeven analysis for, so it's a good idea for every business owner to understand how to use it to help make good decisions.
And if you're not sure what Gross Profit is, or how it's calculated and expressed as a percentage, this video will show you.
