Thread: When Will The Business Break Even?

Know when the business will reach break even from a cash flow standpoint (when monthly cash inflows begin to exceed cash outflows and the company no longer has to dig into cash reserves) and from the perspective of covering all of the initial startup costs and earning profit on top of that. Cash flow break even should occur within the first year if possible, while break even over startup costs may be in the first or second years generally. Funders want to see that your break even point is realistic, but that you are acting aggressively enough that it will not take too long.

Hello friends

This type of report is not one that is automatically generated by most accounting software, nor is it one that is normally produced by your accountant, but it is an important analysis for you to have and understand. For any new business, you should predict what gross sales volume level you will have to achieve before you reach the break-even point and then, of course, build to make a profit. For early-stage businesses, you should be able to assess your early prediction and determine how accurate they were, and monitor whether you are actually on track to make the profits you need. Even the mature business would be wise to look at their current break-even point and perhaps find ways to lower that benchmark to increase profits. The recent massive layoffs at large corporations are directed at this goal, lowering the break-even point and increasing profits.


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in simple words Business only break even once the output cost is higher then initial investment. all business require funding and that is what we talk about.business break even follow the same low,buy low sell high. out of this perspective .BEP is Non sense

Well it's not easy reaching that level. Most businesses usually register net outflow during the first few months in operation before things finally start to pick up. Nevertheless what is always more important is to review and take fast actions to rectify the situation. If possible improve cash flow by controlling the credit facilities provided to customers and increase gradually as business relationship develops.

That was good information..!!