Complete a Breakeven Analysis

In this extension, you will complete a breakeven analysis for your business.

A “breakeven analysis” estimates how much your business needs to sell in order to break even, or have enough revenue to cover expenses and pay back debts.

It also helps you determine when your business might be profitable.

To complete your analysis, you will: Use figures from your Profit and Loss Projection to enter expected costs, And determine what sales level you will need for your business to break even.

To begin, make a copy of the starter project and rename it.

Then, add your business name to your spreadsheet.

Read the “notes on preparation.”

Then, list your fixed costs in the left column.

Add these as dollar amounts.

If you completed a “Profit and Loss Projection,” find this information there.

In the right column, add your variable costs as a percent of sales.

Use whole number percentages, such as thirty percent, instead of decimals.

Total fixed and variable costs are calculated automatically in the rows beneath.

These are used to calculate your breakeven sales level.

Use your breakeven analysis to consider potential business decisions.

For example, if you plan to add another employee to payroll, you can update your salary costs and see how much your business will need to sell in order to cover additional salaries.

Lastly, add a link to your spreadsheet in your business plan.

Now, it’s your turn: Make a copy of the breakeven analysis spreadsheet and rename it, Use figures from your Profit and Loss Projection to enter expected costs, Determine what sales level you will need for your business to break even, And link to your breakeven analysis in your business plan.