Do you know what it takes to keep your business afloat?

Do you know what it takes to keep your business afloat? Break-even points have a HUGE impact on business strategy.

Knowing your break-even point can impact your business strategy in several ways.

• Knowing at what sales level you become profitable gives a tangible target for minimum sales revenue. Even without full analysis of financial statements, you can know that revenue below that point is dangerous and revenue above that point will lead to profit.
• If your break-even point is too high, you may need to take measures to reduce it by increasing margin or decreasing fixed costs.
• Understanding your break-even point may change your approach to price discounts. You may be less willing to give discounts knowing that it increases your break-even point. You may be more willing to give a discount knowing that the extra revenue will push you past break even. You may be more willing to hold the line at full price knowing that you have already cleared break-even.

Knowing and understanding your break-even point is an important step toward strong financial strategy.