Fixed Costs
Rent, insurance, software, equipment leases and some administration costs continue whether the shop is busy or quiet.
Break-even is the number every owner should know. It tells the business how much must be sold before real profit starts.
A business can be busy and still lose money if sales do not cover fixed costs, wages, super, utilities, chemicals and operating overheads.
DCME explains the business in the language owners use every day: cash, staff, customers, risk, equipment, profit and control.
Rent, insurance, software, equipment leases and some administration costs continue whether the shop is busy or quiet.
Wages, packaging, chemicals, electricity, gas and water rise as production increases.
A monthly break-even target should be broken into weekly and daily targets so the owner can see pressure early.
If prices are too low, the business may need unrealistic volume just to survive.
When the owner understands the numbers, risks and operating pressure, the business can make better choices about pricing, staff, equipment, marketing and software.
The point where sales cover costs but no real profit has been made yet.
It shows whether pricing, staffing and rent are realistic.
Yes. Volume without margin can still lose money.
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