The break even analysis describes what the company must do in order to pay off initial costs, overhead and other start-up expenses and begin generating profits. This belongs in the financial projections section of your business plan. It is good to input a table showing revenues minus expenses which leads to profits. break-even-analysisAs seen in the description above, this particular company received profits in the second, third, fourth and fifth month but then incurred a loss in their 6th month due to operations which were more expensive then the revenues they brought in. However, the profits incurred in month 2 through month 5 were enough to cover this loss.

You should explain your break even analysis after showing the chart. You should describe what your initial costs are, why it will take the specified amount of time to break even and any additional assumptions you used to create your numbers. Furthermore, an explanation should be written about the cause of growth in sales. Illustrate what the company must do before it starts making sales including the equipment and supplies the company needs to purchase in order to reach this point.

The break even analysis can also be more descriptive showing sales from each revenue stream and every cost incurred.

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