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These are rarely exact assumptions palo alto

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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 volume? 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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