Breakeven Analysis

Business Advisory Services

Breakeven Analysis is very important for your business clients to understand, because this is the point where the business knows whether it has made a profit or a loss.  It's the starting point for the generation of profits within a business.

I think it's important that, irrespective of whatever role you're playing with your accountants, preparing accounts and income tax returns or offering a Business Advisory function to your clients, you should show your business clients how they should go about calculating their breakeven sales so that they continue reviewing their targeted sales throughout the year, so the calculation that you give them, which is obviously based on the business' Overhead Costs, including Labour, Labour On Costs and the realistic Gross Profit Percentage being generated by the business, is very important for them to know the breakeven figures on a daily, weekly, or monthly basis.

Also, it's a good idea if your client is proposing to employ an additional person that you calculate for them what the extra cycles are going to have to be to initially breakeven on that new employee, or to generate a profit.