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<\/a>From Basic Berkonomics: Available Amazon, B&N, berkus.com and booksellers everywhere.<\/p><\/div>\n
lower, probably negative, for months or even years. The difference is something new \u2013 a target for reduction of expenses or addition to revenue for each month in which the calculated number is lower than 10% of revenues.<\/p>\n
[Email readers, continue here…]<\/em><\/span>\u00a0 We are not taught to think this way, but rather to find the month in which we break even in our plan, then calculate the accumulated losses to that point, add all the cash needed for investment in fixed assets, and end up with the amount needed to finance the business to breakeven through equity or debt financing. This new tool gives you that number plus <\/em>the amount needed to make the business a viable entity with a chance of long term survival.\u00a0\u00a0 The longer the time it takes to break even, the higher the number of dollars needed. Sometimes, the difference is a reminder to consider a reduction of expenses, if revenues cannot be raised from projected levels.<\/p>\n And sometimes, it is just a reminder that we are all in business to make money, not to break even. Just like assuring that your own at-market salary is included in a forecast even if not drawn in cash during the earliest periods, the 10% target reminds us all that the target must be higher than merely breaking even, even if that means reassessing all expenses until the target is met or exceeded.<\/p>\n","protected":false},"excerpt":{"rendered":" Most entrepreneurs, when starting to model their business operations using a spreadsheet, start with expected revenue by month. Then they calculate cost of sales, and then project their expenses, to find the bottom line profit or loss each projected month. … Continue reading