Start Your Business Week by Week, 2nd Edition

The moment of truth

Now that you have a forecast, there are some important calculations to make to see if it works!

Your breakeven point for the year

This is the amount of sales required to make a profit in your business in the 12 months of this forecast. To calculate it:

1. Add up all your monthly Total Sales to get a figure for the year. Call this figure A.
2. Add up all your Total Cost of Sales to get a figure for the year. Call this figure B.
3. Add up all your Total Overheads to get a figure for the year. Call this figure C.
4. The first calculation is A minus B to get the total Contribution (Gross Profit) for the year. Call this figure D.
5. Next, calculate this as a percentage of sales: D divided by A, then multiplied by 100. Call this figure E.
6. Finally, ...