Unformatted text preview: that the company needs to sell about 1,200 units per month to break even.
This chart, based on the table example from the previous page, shows that the company needs to sell
approximately 1,200 units in order to cross the break-even line. This is a classic business chart that
helps you consider your bottom-line ﬁnancial realities. Can you sell enough to make your break-even
Of course the break-even analysis depends on assumptions made for average per-unit revenue,
average per-unit cost, and ﬁxed costs. These are rarely exact assumptions.
Palo Alto Software’s business resource website www.Bplans.com offers an easy-to-use online Breakeven Analysis Calculator. Objectives
Objectives are business goals. Set your market share objectives, sales objectives, and proﬁt objectives.
Companies need to set objectives and plan to achieve them.
Make sure your objectives are concrete and measurable. Be speciﬁc, such as achieving a given level of
sales or proﬁts, a percentage of gross margin, a growth rate, or a market share. Don’t use generalities
like “being the best” or “growing rapidly.”
Broad statements like “maximize customer satisfaction” are not serious business plan objectives,
because they cannot really be measured. Much better objectives would set measurable goals, such as
holding gross margin to 25 percent as a minimum, or selling more than $3 million, or achieving six
percent proﬁt on sales and ten percent return on equity. HURDLE: THE BOOK 3.6 ON BUSINESS PLANNING If less tangible goals are critical to a plan, ﬁnd a way to measure them. For example, if image and
awareness are vital, then plan for statistically valid surveys to measure the improvements in image
and awareness. You can also set goals for market share, and purchase research to measure the actual
share. Or, if you want to focus on customer satisfaction, plan for a survey to quantify satisfaction or
specify numerical objectives regarding returns or complaints. Summary
At this point, you’ve started a plan.
If you’re working on a plan for an exist...
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