BE = FC/GPM

Breakeven = Fixed Cost divided by Gross Profit Margin.

For example, if you fixed costs, costs you have to pay every month even if you sold nothing, (rent, utilities, phone, insurance, and everyone in the office, payments you committed to, marketing, etc) were $55,000 a month, and when you sold something your Gross Profit Margin was 40% (revenue – direct expenses BECAUSE you made that sale – direct labor, materials, sales commission, etc.) then your Breakeven would be $55,000 / .4 = $137,400.

You would have to do $137,400 in business to break even – you make nothing.

So to lower your breakeven and be able to make money more easily, then you would need to lower your fixed cost or increase your gross profit margin by either raising your prices and/or lowering your direct costs.

So, using the above example, what if we lowered our fixed cost from $55,000 to $48,000?  $48,000/.4 = $120,000.  We lowered our indirect costs by $7,000 and start making money with $17,400 LESS in sales each month.

What if we now increased our Gross Margin by 3% to 43%?  $48,000 / .43 = $111,627.  Now we start making money each month with $25,773 less in sales.

It’s easy to see that this goes the other way.  Hire one or two more employees, and finance a truck, and add a few more expenses, and pay too much for direct expenses and your profit vanishes.  

As the leader, you are responsible to figure this out.  Nobody else can or will do it – not even your accountant.

You got this?

The Diamond Cutter

So you spent years building the business, and you got the top-line sales up, but you still are not making a profit.  

Now you need to be a diamond cutter.  A diamond cutter starts with a rough stone and takes bits away and polishes it to make it more valuable.

So what do you do?

Optimize conversion rates and performance of departments. Improve key KPI’s.

Get better at selling.

Eliminate costly mistakes.

Remove restraints.

Tweak your prices, especially on things you aren’t making money at – or stop doing those things.

Remove unnecessary expenses.

Get rid of things you do not need.

Spend less dollars than you take in.

Carve the diamond out of what you have.

Standards don’t maintain themselves.

“Standards don’t maintain themselves.  They fade without consistent reinforcement & accountability.”  -Brigham Dickenson

We have to talk about who we are, what we represent, and what our values are, or they are nothing.

We have to say it; put words in.  We have to express it audibly, no matter how much we think “they all know that”.

We have to make decisions and take actions that demonstrate what we mean.  

We create our standards, and we have to keep them going – on purpose.

Do you do that in your organization?

Procrastination magnifies problems

Procrastination magnifies problems.

Like waiting to get rid of a toxic employee, or waiting to address quality problems.

Like waiting to fix your marketing, or waiting to fix the sales department.

Like waiting to fix a leak in the boat, or waiting to get good financial statements.

Like waiting to hire the right people, or waiting to maintain a vehicle.

Problems get bigger when you leave them alone.

Unhurried time – revisited

In a recent post I said “The ultimate luxury of a modern world was the gift of unhurried time”.  I did not mean that the modern world gives us unhurried time.  It does the opposite.  We have more devices, access to the worlds information, entertainment, tools, and “stuff” than ever.  All these things are supposed to make our lives easier.

But as my son pointed out, we are “busier than ever” with all these modern things, and have trouble paying attention to it all.

And that is why the “ultimate gift luxury of a modern world is the gift of unhurried time”.  It’s a luxury.

But to have unhurried time, YOU must be disciplined.  You must limit your intake of information and not overcommit.

If you cannot be self-disciplined at the 2026 buffet table, it’s your own damn fault.  And it always will be.

Simplify.  Reduce the things you pay attention to, and say “no” 10X more than you do now.

As for what I do with my own unhurried time – I may be working.  That’s right.  But I enjoy working when I can focus on one thing and do it well.

I might be doing chores around the house – at my pace and at my will.  No time pressure makes all the difference.

Do anything in a hurry, takes the joy out of it.  That’s me.  

How about you?