1.
1. explain why calculating a
Solution
1. In general, the point at which gains equal losses.
When you have what you think is a good idea, the first step is to analyze whether your business
will succeed. The first financial tool you should use is a break-even analysis. A break-even
analysis will calculate what your revenues must be for your business to produce a profit.
The key to using this tool is to be realistic in your expected revenues and conservative high in
your expected costs. The break-even analysis will force you to do the research that will allow
you to know whether you should pursue your business idea further.
You will need to do a break-even analysis for your business plan anyway, but it