How Small Businesses Can Reach Break-Even

very business owner should know their break-even point. It’s the number that tells you how much you need to sell before you start making a profit. Once you pass it, every sale adds directly to your bottom line.

Here’s a simple example for a service business:

Imagine you run a consulting business.

• Your fixed costs like rent, software, and insurance are $4,000 per month.

• You charge $200 per session.

• Your variable costs such as materials, travel, or admin support are $50 per session.

Here’s the formula:

Break-Even Point = Fixed Costs ÷ (Sales Price – Variable Costs)

4,000 ÷ (200 – 50) = 26.6

That means you need to deliver 27 sessions per month to break even. Anything above that is profit.

Why does this matter? Because when you know your break-even point, you can:

• Price your services with confidence, knowing you’re covering costs.

• Set realistic sales goals that actually align with your expenses.

• Decide when it’s the right time to expand, hire, or invest in new tools.

Your break-even point isn’t just a number, it’s a tool that gives you clarity and control over your business.

Of course, to get the most out of this, you’ll need accurate numbers. That’s where I come in! I make sure your bookkeeping is clear and reliable so you can make the right decisions going forward. Schedule a call to learn more.