Posts by apd_admin

Why do 50%+ companies fail …..

You need to know how many units you must provide to cover your costs. These units can be products or hours of service.

APD has been using a unique; successful and focussed 6stepGoal Setting process for the last 15 years. We would like to share an overview of this model with you ……

According to the following report http://www.goalband.co.uk/goal-achievement-facts.htmlmost of us have been trying to set goals for the past 80 years. That is a huge amount of goal setting; an incredible amount of disappointment. OUR MODEL …

Step 1. DREAM BOARD. Write out every thought and idea you have of what you wish to complete during the year on a dream board. JUST LET IT FLOW.

Step 2. LIST. Divide the above into BUSINESS; PERSONAL and HEALTH lists.

Once the dream board activity is completed; then divide into relevant lists. We select the 3 lists you see in the above; but the lists should be relevant to you.

Step 3. PLAN. Not all the items on the list will require planning; but those that do put the word PLAN next to the activity.

 Step 4. DATES. Decide what activity needs to be completed before MAR 31 and put ST (Short Term) next to it. Decide what must be completed before Jun 30 and put MT 9Medium Term) next to it. The rest must be completed before Dec 31 so put LT (Long Term) next to them (see example below).

Step 5. PLANNING. Now select each goal that has the word PLAN next to it and develop the plan for that goal using the 7Step APD Model.

Take every goal that requires a plan and develop your plan. At APD we use the highly successful 7Step APD Model for our planning; however any planning model you are familiar with that produces results can be used.

See the unique 7Step APD Model

As a result of this step; there should now be a full list of activities available for you to enter into your diary for the next 12 months. This becomes your working Project Plan for the year.

Step 6. ACCOUNTABILITY. Finally, fill out the Accountability sheet (we use a specific one at APD but again this can be developed by you to suit yourself) and share with the person that will be accountable. Update this document on a regular basis as you go through the diary and as you achieve your goals.

The APD 6Step Goal Setting is a simple but effective tool to help you achieve your goal. The selected date for the sign off of the goal/activity will help us all get beyond Jan 15th every year and avoid disappointment.

Question – how are you going to make sure that every year you achieve your goals? If you don’t; how sure are you that your competitors are not getting there before you?

MISSION: APD WILL ENSURE THE RIGHT PERSON RECEIVES THE RIGHT SOLUTION IN THE RIGHT WAY; AT THE RIGHT TIME FOR THE RIGHT REASON – EVERY TIME.

COMPANY VALUES: IMPROVE COMPANY REPUTATION AS PROBLEM SOLVER AND SOLUTION PROVIDER. APPLY COMPANY STANDARD TO OUR CLIENTS. PROVIDE SINCERE AND HONEST SERVICE TO OUR CLIENTS. TAKE ALL CLIENT ISSUES AND PROBLEMS SERIOUSLY.

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Can Processes and Procedures Help Your Business Survive?

You need to know how many units you must provide to cover your costs. These units can be products or hours of service.

Businesses fail all the time. Around half of UK start-ups fail within five years, according to the insurer RSA, with survival rates lower now than they were before the financial crisis.

What are the reasons for failure? The main one is cash-flow. This arises from not being properly prepared, a lack of capital due to bad debts on the part of creditors, and choosing the wrong people to work with as partners.

However, there are also things businesses fail to do to help underpin their structure and make them ready for growth and adaptable to change.

SMEs often don’t have the necessary business processes and procedures in place to provide the backbone for their development.

The Pitfalls of Entrepreneurial Traits

There are qualities that work for entrepreneurs, that differentiate them and often give them an edge over the competition:

  • They need to have a visionary mindset, to think ahead and see opportunities where others do not.
  • They cannot be risk-averse, but be ready to take their chances, to strike when they think the time is right.
  • They must also be resilient, to take the knock-backs on their journey to success.
  • They need a degree of flexibility too.
  • They must care, with passion, for what they do.

However, these same traits may be a disadvantage when it comes to patiently structuring a business for long-term survival.

There has to be a firm foundation upon which you build your business otherwise you risk your dreams crashing down around your head 

The product can only be as good as the process that forms it, and the service depends on how the business delivers it. At the startup stage, there might be a lot of drive behind a business, but less in the way of administrative detail.

Enduring success comes from ensuring the quality in what you offer, and you do this by having clear business processes and procedures.

Creating Business Processes and Procedures

Once a business gains traction it is looking to grow but also to maintain a level of consistency. Furthermore, once a startup goes beyond a sole-trader or partnership structure and begins to take on employees, it becomes critical that everyone is following the correct steps.

 A business might begin by being one person’s vision, but for it to grow, that vision must be shared and then executed in a practical way by people put in the key roles for this purpose.

Procedures set out how to accomplish certain tasks, but they also provide a means of measuring performance.

With properly written down processes and procedures you’re helping to consolidate what you’ve built while providing the basis for further growth. These documents can serve as a tool for training and staff development.

In essence, these written down processes and procedures help enshrine an organisation’s values while also being a cornerstone upon which to build and improve the business.

*This post was adapted from my original interview with Business Aspects Magazine.

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How Risky is Your Business’ Growth?

You need to know how many units you must provide to cover your costs. These units can be products or hours of service.

There is constant pressure for business growth and expansion, and the entrepreneurial mindset fuels this.

However, businesses undergo evolutionary changes as they grow, and if they fail to make the structural and procedural adjustments to meet these changes they can suffer growing pains with potentially fatal consequences.

If you end up running before you can walk you run the risk of taking a serious fall. People want things to get bigger, but dealing with issues on a larger scale can expose a lack of basic preparation.

Overwhelming Growth

Not all businesses are suited to growth, and not all business owners or managers are automatically suited to running a larger business as opposed to a small one.

 You have to determine when the right time is to push ahead, because how well you manage growth, and growing pains, may affect the future of your business. 

Business growth pains are not restricted to people at the top. Individuals and departments can suffer from the excessive stress of work demands, without feeling they have sufficient time to get everything done.

Often there’s an inability to say no. Every new opportunity is a chance for more growth, but this can mean ignoring the danger of taking on too much.

The consequences filter down, affecting the morale of employees and helping create a culture of chaos where workload smothers structures and procedures either cannot cope, or do not yet exist to deal with the sheer amount of work.

The result is damaged productivity, higher staff turnover, and pressure on the leader to keep things running no matter what.

Persistent Firefighting

If a business spends excessive amounts of time dealing with short-term crises it usually stems from a lack of long-term planning.

The absence of strategy means having to put fires out all the time. Growth requires strategic planning, otherwise a company can find itself living from day to day, facing the unexpected and rushing around to meet sales targets.

Lack of Vision and Poor Communication

If people working at a business do not understand where it is heading, or why it needs to change to grow, then this opacity can mean a lack of sufficient communication.

If this poor communication is combined with rapid change, the business risks losing its employees because it has failed to get across its vision for growth.

Growing pains often expose flawed communication and inadequate leadership.

There may be a lack of formal systems to channel information or an unwillingness, or inability, to be open and transparent in communications.

Growth is challenging, and requires structural underpinning combined with a procedural eye for detail.

It’s about managing transition and, where required, seeking the right outside help to accomplish this”

If you’re experiencing business growth pains, or planning growth, and would like to discuss managing this transition please contact me or visit apdresolutions.com.

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Strategic Planning: How Committed Are You to its Success?

You need to know how many units you must provide to cover your costs. These units can be products or hours of service.

Strategy is the key to business success. Disciplined strategic planning is essential to capturing this strategy and working out how to execute it.

Some businesses fail to do this at all, but others go as far as to develop a plan, only to see it fail. What are the reasons for this failure?

Wanting a strategy is not enough. You must know the real reasons why you need a strategic plan and be properly committed to it.

The Right Reasons and People

Just because everyone else seems to have a strategic plan is not a good enough reason on its own to have one. Strategy requires full commitment and an understanding of how it can make a significant improvement to your business.

 A strategic plan must involve the right people, from its beginnings through to its conclusion, with management understanding that it must be willing to make the necessary decisions to make the plan work. 

People only commit to the process if they are clear, from the start, why they are having a plan, and that they must take the time to do it right.

Leadership can be an issue, so it’s vital that key people in authority are behind the plan and championing it.

Setting Realistic Goals

Are you recognising realities in the marketplace and anticipating potential problems?

You can’t bury your head in the sand or discount problem areas because they haven’t yet had an immediate impact on you.

 An effective planning process means taking facts on board and appraising things as they are, to understand how to then look ahead.

Strategic plans should contain realistic, manageable goals and objectives, and the programmes to carry them out. Moreover, there must be the resources available to realise them.

Think in terms of fewer, but focused, goals…and always pursue results.

Following on and Acting

Effective strategic planning must mean a willingness and capability to change. Without change, there can be no positive outcome.

Market conditions change and an agile business will change to meet them.

Demonstrating commitment to strategy means being accountable for putting the plan into action and seeing it through. Not delivering must have consequences.

Building a realistic direction for your business requires an effective planning process. And a well-thought out strategy that means something, and that everyone can get behind.

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Break Even and Profitability: What are the Keys to Success?

Understanding the total costs involved in launching a business and bringing a service or product to market can be a stumbling block for many entrepreneurs. Crucially, this impacts on pricing, with many people in business discovering that they cannot sell enough of their service or product to break even or make a profit.

You need to know how many units you must provide to cover your costs. These units can be products or hours of service.

It is vital for a business to know its break even point, because this will determine pricing and profitability.

Benefits of a Break Even Analysis

For some people in business, they place so much emphasis on the inspirational nature of what they do, and the drive behind it, that they miss out on the essentials.

Someone might feel they have a unique selling proposition, something that will differentiate them in the marketplace and, ultimately, make a good profit. Without a break even analysis, this is not much more than conjecture.

Obviously, there will be an element of educated guesswork at the start but you should back this up with solid research. This means a thorough analysis of your market.

Two basic factors determine a break-even point: anticipated revenue, and the costs of doing business.

Anticipated Revenue

Largely, anticipated revenue is down to market demand: the more people demanding your services or products, the greater your sales volume.  The greater the sales volume, the sooner you can cover your costs.

There are going to be several factors affecting this, including:

  • what you have to offer
  • the size of your target audience
  • the effectiveness of your marketing and promotional activity

These different factors will come into play over time, affecting the overall revenue your business can expect to generate.

Of course, then there are your costs to consider.

What are the Costs Involved?

Businesses will have startup costs and fixed and variable costs associated with their day to day running.

 Startup costs can have a huge impact on your break even point. The less you need to start running your business, the sooner you are likely to break even

 On top of this are fixed and variable costs for a business. Fixed costs can include things like utilities and building rent, which will be there regardless of business activity. Variable costs can run from day to day operating costs to buying stock.

The higher your overheads, the longer it will take you to break even. Another contributing factor will be your pricing strategy.

The higher the mark-up on a product, for example, the higher the gross profit to set against variable costs. However, this must work in relation to the target audience and market conditions..

Decision Making

You calculate your break-even point by dividing fixed expenses by margin. The margin comes from subtracting total variable expenses from net sales.

It is a foundation for making important business decisions.

Your break even point can help determine how you reduce and control your fixed costs. Control these costs and you can reach a lower break even point to go into profit more quickly.”

To strengthen the chances of break even and profitability for your startup, please contact me.

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Can Strategy Restore Work Life Balance for Startups?

One of the most important business tools you can use in your business is understanding your breakeven poin

People start their own businesses for a variety of reasons, but what many of them find once they have taken this route, is that their work life balance suffers.

Having gone into business for themselves, they were confident that it would realign how they spend their time, only to find that instead it eats up all the time they have available.

They should look beyond a philosophy of work-is-life, and approach business strategically and methodically, to make better use of their time, and to restore their work life balance.

There are four key areas to focus on:

  1. Your USP
  2. Your financial analysis
  3. Your target market
  4. What your competitors are doing

What is Your USP?

A unique selling proposition (USP) is what you hang your marketing strategy on, so that you can target your sales effectively.

It might be something that differentiates your product or service. It could be around price structure or customer service, or it may involve specific distribution channels.

 “Finding your USP requires analysis and creativity, an understanding of the market, your competitors, your niche, and where you will fit in”

From the perspective of time, a USP allows you to focus your marketing rather than be scattershot in your approach. It encourages efficiency and a streamlining of your activities.

Financial Analysis

Planning your finances is not the most exciting aspect of starting a business. But it is an essential one. It can also save you a great deal of trouble, and time, later.

“Most businesses fail because of cash-flow problems so a crucial part of your planning should focus on this”

It is also vital to look at what funding you will require before you launch, in time to find the right source.

A sound financial analysis should also look at what future investment you will require for projects, because this will affect the more immediate choices you make.

Getting a clear financial picture early onwill save you time, and energy later.

Who Are Your Customers?

Closely related to your USP, understanding your target market is the key to launching and running your business as efficiently and effectively as possible.

To make your marketing count you must know who your potential customers are. Anything less, and you risk becoming a busy fool, spending time, money and resources chasing an elusive market.

What About the Competition?

Any startup must understand where it fits in a wider context. This means analysing the competition.

Always looking over your shoulder is distracting and draining.

“Gaining knowledge about who your competitors are and what they’re doing will help you deal with potential threats and make the most of opportunities”

This knowledge will then inform your overall business strategy, helping you understand the probable consequences of the decisions you make.

Yes, people who start up their own businesses are dedicated to them, but this doesn’t mean they should feel completely drained by them. A sound business strategy will go some way to restoring their work-life balance,

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A simple business tool you can use to instantly give you more clarity in your business.

One of the most important business tools you can use in your business is understanding your breakeven point.

Breakeven analysis seems to be one of the areas that small company owners, in particular, don’t spend as much time on as they ought to. This article is going to find out how it can be an area of improvement for companies. We will address the questions below.

So, what exactly is a breakeven analysis?

Why is it so important?

What would be the benefits of completing one?

To begin with; what exactly is break even analysis – it’s an important, though underused, business tool. It is used to help companies to determine the level of profitability – especially useful if you use it together with a projection strategy.

This tool is used across all industries to initially find out your FIXED COSTS. Why would you be doing this?

It is paramount that you fully understand what your business is costing you to run. The product; service; programmes that you provide to your customers are NOT important at this stage. You EXPECT to be making a profit from your products; services or programmes otherwise you will definitely NOT succeed in business.

The way we explain the situation to all our clients is this – how much do you have to earn on the 1st of every month for you to start making a profit? In other words, what are the monthly fixed costs for your business?

How do you work that out – you simply create a table which will contain all of the costs that you are paying related to the company; either monthly or annually. So let’s look at some examples that are pretty generic – Vehicle/s – if vehicles are part of the business and you are making monthly payments; then they must go into this table; (also be aware that cars do depreciate so the depreciation should appear in the annual column as a fixed cost too).

Technical devices – in this day and age; businesses will have many technical devices that are leased or rented. If this is the case with your business, then they must appear in this table. HOWEVER; if you have purchased these devices outright; they are NOT part of your fixed costs.  Examples here are landline; mobile phones; printers in the office; computers and so on.

Website/Social media – all fixed costs associated with this aspect of your business once again must appear in the table. Again; if you have paid outright for the development of your website this cost will not appear.  Hosting; monthly payment for social media traffic are costs that you must put into the table.

Office consumables – the costs for your office consumables are also fixed costs. Paper you purchase to use for printing; stamps for sending letters; printer cartridges; envelopes; pens and pencils and so on.

Office furniture – in some cases; businesses rent the furniture for their office space – if so it is a fixed cost.

Rent – if you are renting or leasing your office this is also a fixed cost and needs to be included. If you happen to have a business where you need extra buildings [due to number of staff or warehouses if storing material or you are in the trades] then these also are part of this table. In all the buildings that you use, there will be utility bills to consider.

Business Insurance – this will be included as a fixed cost.

External Associates – I am sure you will be paying an accountant either a monthly or annual fee and may have legal representative associated with the business.  You may also have sub-contractors on the books or external consultants. These examples are all fixed costs (unless your staff is on commission) and should appear in your table.

Salaries – you should know your organisational chart and your planned manpower; therefore your salary section should be easy to complete.

If you are starting off your business; it is very tempting to guess at what these fixed costs might be. This could turn out to be a costly mistake as you may think that the target figure is far lower than it actually is – how easy in those circumstances would it be for one to relax a little thinking that you are now in profit territory? So do try to have the fixed costs as precise as possible. Every business will have some extra over and above what we have discussed to date – you must make sure you add everything in.

Now would be the time for you to multiply the monthly costing by twelve and put that amount in the total column along with the annual costings. Now add up the total column for your annual breakeven; divide by twelve and you have your monthly fixed cost breakeven.

There will be some areas of the business that are costs for running your business (in other words not bringing in any profit) which you have not been able to include above as the cost may vary from month to month or time to time. This is known as VARIABLE COSTINGS.

Tax and insurances – this is an area that will be a variable cost.  It’s another area that you may not be able to be precise initially but need to be taken into account along with bank charges. Your accountant should be able to help ensure you have a good picture of what these costs will be for your business.

Other variable costings would include COMMISSIONS for the staff – you would not know what these would be up front; so again either target projections or historical evidence would help you to decide what to put down.

In some cases there may be maintenance and repair costs which come down to you. If so, these are variable costs and you would need to determine with your accountant what to have in the table.

Advertising and marketing is another area that may be a variable cost unless you have a dedicated monthly sum for an external company to do it for you.

Travelling and accommodation –unless you are invoicing your clients for this it becomes a variable cost. A very simple example is if you are networking – this is part of building up your business; you are traveling back and fore to the network event/s and should you be staying overnight this cost is down to your business. How many times in a month/year are you likely to be doing this? This needs to be part of your costings.

Now that you have an understanding of your fixed costs; an idea of your variable costs; adding these figures together will help you to know how much your business is costing you to run. As a result, you can now use this information for the final part – that of PRICING your product/service or programme.

It’s only at this stage that you will know what you must sell your goods for [and how many units] to make a profit within the business. 

You should know the COST of getting your product; services or programmes onto the shelf (this is known as UNIT COSTS); so by adding UNIT COSTS to the ANNUAL FIXED AND VARIABLE COST you now know how much you need to earn throughout the year to start making a profit. Divide this NEW TOTAL by twelve and you will have the monthly figure required for your UNIT PRICE TO BREAK EVEN. Decide what % above your BREAKEVEN you want; and that becomes your PROFIT MARGIN.

Hopefully, we now have a better idea of what a breakeven analysis is; how to conduct one; the importance to the business and the benefits of completing one.

With 80% of businesses going out of business in the first 18 months and a further 4 out of 10 going out of business within five years, our mission is to turn those numbers significantly around helping thousands of small business owners follow their dream of being a successful business owner in profit and with a clear path for greater profits.

If you liked the article please feel free to like and share

If you would like to learn more, please join the B-Growth Solutions platform by joining as a FREE member and receive module one to get started.

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What is the Importance of Visualising Your Company Goals?

Can you make your dreams come true? For many, there is a considerable gap between where they are and where they want to be.

For a business to become more successful, there needs to be a sense that this gap is bridgeable, that you can achieve your objectives.

Sound business planning and strategy must be the art of the possible, and practical, however, at its earliest stages, company goals can seem very distant

How then, to make the impossible seem possible, to shape objectives into something which can translate into practical action?

It’s about making a positive start and giving some form to your ideas. Goal-setting must begin somewhere, and a dream board is the ideal platform on which to begin to build your ideas.

The Power to Visualise

Visualisation is a mental technique. The dream board is a simple but highly effective tool to help you visualise your image of the future.

The simplicity of this device should not detract from its usefulness.

By representing your goals with pictures and images, you can strengthen your emotions and give them a practical outlet

 Your emotions are energy, and this energy responds to visual stimulation. By creating a dream board, you’re sparking your emotions and prompting yourself to idealise your ideal life.

Furthermore, ensuring your dream board is always visible can then help to motivate you every day.

Goal Setting Using a Dream Board

Look for pictures that capture the feelings, experiences and things that you want to attract into your life.

Place these on a board. It can be a notice board, a pin board or something similar. Don’t limit yourself. Be creative. Include anything you find inspirational.

The purpose of a dream board is to bring your goals to life so think first about what your goals are in key areas such as, career, finances and personal growth.

The key is that visualisation allows you to expand on what these goals are. Once you set things in motion, you’ll be surprised at the momentum you can achieve as the ideas start to come. Remember, you’re focusing on how you want to feel.

The Law of Attraction

Creative visualisation helps you attract the things you focus on into your life. This ability is the law of attraction.

This is where thoughts eventually turn into things. It is about unlocking potential.

It may sound, at first, vague and unrealistic, but in fact it is grounded in reality. Essentially, it is the idea that what you give out to the world will return to you in the end.

 The blank canvas represents possibility, and you are in control of creating the finished picture. The idea of the law of attraction is that like attracts like.

By visualising your goals, and acting on them, you attract others to you, who will help make these things a reality

You must begin with the intention, to attract certain things into your life. The dream board is the means to visualise this.

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B Growth’s Weekly Blog – Breakeven Analysis

Breakeven analysis seems to be one of the areas that small company owners in particular don’t spend as much time on as they ought to. This blog is going to try to find out how it can be an area of improvement for companies. We will address the questions below.

So, what exactly is a breakeven analysis?

Why is it so important?

What would be the benefits of completing one?

To begin with; what exactly is breakeven analysis – it’s an important, though underused, business tool. It is used to help companies to determine the level of profitability – especially useful if you use it together with a projection strategy. This tool is used across all industries to initially find out your FIXED COSTS. Why would you be doing this? It is paramount that you fully understand what your business is costing you to run. The product; service; programmes that you provide to your customers are NOT important at this stage. You EXPECT to be making a profit from your products; services or programmes otherwise you will definitely NOT succeed in business.

The way I explain the situation to all my clients is this

How much do you have to earn on the 1st of every month for you to start making a profit? In other words, what are the monthly fixed costs for your business?

How do you work that out

You simply create a table which will contain all of the costs that you are paying related to the company; either monthly or annually.So let’s look at some examples that are pretty generic.

Vehicle/s

If vehicles are part of the business and you are making monthly payments; then they must go into this table; (also be aware that cars do depreciate so the depreciation should appear in the annual column as a fixed cost too).

Technical devices

In this day and age; businesses will have many technical devices that are leased or rented. If this is the case with your business, then they must appear in this table. HOWEVER; if you have purchased these devices outright; they are NOT part of your fixed costs. Examples here are landline; mobile phones; printers in the office; computers and so on.

Website/Social media

All fixed costs associated with this aspect of your business once again must appear in the table. Again; if you have paid outright for the development of your website this cost will not appear. Hosting; monthly payment for social media traffic are costs that you must put into the table.

Office consumables

The costs for your officeconsumables are also fixed costs. Paper you purchase to use for printing; stamps for sending letters; printer cartridges; envelopes; pens and pencils and so on.

Office furniture

In some cases; businesses rent the furniture for their office space – if so it is a fixed cost.

Rent

If you are renting or leasing your office this is also a fixed cost and needs to be included. If you happen to have a business where you need extra buildings [due to number of staff or warehouses if storing material or you arein the trades] then these also are part of this table. In all the buildings that you use, there will be utility bills to consider.

Business Insurance

Will be included as a fixed cost.

External Associates

I am sure you will be paying an accountant either a monthly or annual fee and may have legal representative associated with the business. You may also have sub-contractors on the books or external consultants. These examples are all fixed costs (unless your staff is on commission) and should appear in your table.

Salaries

You should know your organisational chart and your planned manpower, therefore your salary section should be easy to complete.

If you are starting off your business; it is very tempting to guess at what these fixed costs might be. This could turn out to be a costly mistake as you may think that the target figure is far lower than it actually is – how easy in those circumstances would it be for one to relax a little thinking that you are now in profit territory? So do try to have the fixed costs as precise as possible.Every business will have some extra over and above what we have discussed to date – you must make sure you add everything in.

Now would be the time for you to multiply the monthly costing by twelve and put that amount in the total column along with the annual costings. Now add up the total column for your annual breakeven; divide by twelve and you have your monthly fixed cost breakeven.

There will be some areas of the business that are costs for running your business (in other words not bringing in any profit) which you have not been able to include above as the cost may vary from month to month or time to time. This is known as VARIABLE COSTINGS.

Tax and insurances – this is an area that will be a variable cost. It’s another area that you may not be able to be precise initially but need to be taken into account along with bank charges. Your accountant should be able to help ensure you have a good picture of what these costs will be for your business.

Other variable costings would include COMMISSIONS for the staff – you would not know what these would be up front; so again either target projections or historical evidence would help you to decide what to put down.

In some cases there may be maintenance and repair costs which come down to you. If so, these are variable costs and you would need to determine with your accountant what to have in the table.

Advertising and marketingis another area that may be a variable cost unless you have a dedicated monthly sum for an external company to do it for you.

Travelling and accommodation –unless you are invoicing your clients for this it becomes a variable cost. A very simple example is if you are networking – this is part of building up your business; you are travelling back and fore to the network event/s and should you be staying overnight this cost is down to your business. How many times in a month/year are you likely to be doing this? This needs to be part of your costings.

Now that you have an understanding of your fixed costs; an idea of your variable costs; adding these figures together will help you to know how much your business is costing you to run. As a result, you can now use this information for the final part – that of PRICING your product/service or programme.

It’s only at this stage that you will know what you must sell your goods for [and how many units] to make a profit within the business.

You should know the COST of getting your product; services or programmes onto the shelf (this is known as UNIT COSTS); so by adding UNIT COSTS to the ANNUAL FIXED AND VARIABLE COST you now know how much you need to earn throughout the year to start making a profit. Divide this NEW TOTAL by twelve and you will have the monthly figure required for your UNIT PRICE TO BREAK EVEN. Decide what % above your BREAKEVEN you want; and that becomes your PROFIT MARGIN.

Hopefully, we now have a better idea of what a breakeven analysis is; how to conduct one; the importance to the business and the benefits of completing one.

Hywel Griffiths

Co-Founder and Co-Director Business Growth (International) Ltd.

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