Staying above breakeven

Larry Janesky: Think Daily

What costs do you have to pay even if you do no business?  Add them up.  Do it now.  Today.

What is your gross profit margin?

Fixed cost/ Gross Profit Margin = your Breakeven.  

So if all the people you had to pay, the rent, the insurance, the vehicle payments, utilities, etc. added up to $20,000 a week and your gross margin was 40%, then $20,000/.40 = $50,000 a week.

If, during this slowdown due to the virus, you are selling less than $50,000 a week, you will lose money.  

Don’t do that, because if you run out of cash, it’s game over.  Instead, cut your costs now.  Then recalculate your breakeven.

Play a big offense and do all you can to get sales up.  But keep your breakeven below sales.


Daryl Festa

This is excellent advice for thinking ahead.

Daryl Festa

This is excellent advice for being prepared and thinking ahead.

Sean Perry

Thank you. I was thinking along these lines last night, to take a good look at reducing overhead now. Many of us survived then prospered after the Great Recession. The time is now to start putting those lessons in to action.

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