Understanding your breakeven point is very key to driving your business to profitability. Sadly, many entrepreneurs don’t understand this very important success factor.
If you don’t know when your business is making profit or the number of products you must sell to get your business to start yielding profit, then, it’s very unfortunate that you might not make profit anytime soon.
Understanding your breakeven point makes you know that it’s not about the huge revenues, but it’s about whether your revenues have covered your cost.
A lot of entrepreneurs bask in the euphoria of huge revenues whereas in actual fact, they are making huge losses. The surprising thing they soon realize is that at the end of the year, they are broke and are out looking for the next capital injection to keep their businesses afloat.
A perfect understanding of your breakeven point will ensure that you make the necessary adjustments in terms of expenditures and maximize production efficiency. You might need to hire more marketing staff to drive sales and revenue growth. You might need to outsource certain business functions that are outside your business’s core competence to reduce production overheads. You might need to introduce certain productivity enhancement technologies to accelerate productivity in efficient and cost-effective ways.
To learn more and perfectly understand your breakeven Point as well as how to calculate this, I strongly recommend reading the book “Breakeven Point Analysis” by Amara Okoli Tasie.
You may also want to read How to Calculate Breakeven Point: TEFConnect
Amara Okoli Tasie is the Founder and CEO of Maracruiz Organics, one of Nigeria’s fastest growing manufacturers of natural hair products.
She is a sterling example of a Nigerian entrepreneur who defied all odds to grow a business from almost nothing to a thriving business with presence in more than 5 African countries.
Mrs. Tasie mentors women entrepreneurs especially those in the manufacturing sector on the do’s and don’ts of business and how women can leverage available tools to grow their businesses.
You can download the book “Breakeven Point Analysis” here.
Good luck as you learn more and more business tools that will help you to become a successful entrepreneur.
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