How many jobs do you need to do on a daily basis to break even? Tom Stewart demonstrates how to measure this metric.
It’s a pretty simple addition exercise to add up your total fixed expenses and your total revenue. It’s even still routine multiplication to figure up your variable expenses in several categories. But to begin to predict where you begin making a profit in your business, you need to know the Break Even Point…that moment of sales and expenses when you can breath your first sigh of relief.
Most businesses spend their first 3-5 years trying to hit that break even mark regularly, so it’s especially critical for a new business just starting out to track and record expenses meticulously and to price based on your actual costs rather than a guess. You need to know, week to week, exactly how many houses you need to clean to keep the bank account in the black so that you can keep on cleaning houses for another month.
As your business grows, as you gain more clients and hire more technicians, your break even point changes. That’s what makes the Break Even point a critical metric to follow almost daily during major growth periods.
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