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    1 Reply Latest reply on Mar 4, 2011 10:55 AM by Pinklinz

    Estimated Income and Breakeven points?

    Newbie

      I am in the process of writing my business plan and proposal. I plan on sending my proposal into several investors. I'm having a difficult time with estimating income, ECt. I am new to this. How am I supposed to estimate how much money I will profit when there is no telling what customers will purchase? This may sound silly but to me it sounds realistic. I need the best possible proposal. I could use some advice.

        • Estimated Income and Breakeven points?
          Zing1234 Wayfarer

          How it works is you come up with a fanciful figure of what you would sell in say a month. I don't know what it is you're selling but if it's a physical product let's say you sell 1000 "units of the product." what you would use for your break even is the revenue from these 1000 units, and the cost it takes you to have these 1000 units in your inventory. You would also factor in all monthly expences. Rent utilities, staff, for example. Now the chart will show you are going to sell 1000 of your units. It'll also show how much all your expences monthly will run you. No matter what happens your inventory rent and utilities is going to cost you the same amount every month you sell 1000 units. The break even point is how many of those 1000 units you would have to sell during the month that pays all of your expences.

           

          There is some help in this. You can download templates for MS Excell that will calculate this for you. But from what I'm reading on your post it looks like you need what the "idea" of it is. I think I explained it the right way. Your "units" isn't what you'll actually sell, it's a lofty estimate. But what that does is tell investors in no uncertian terms that assuming you sell x amount in the month, you'll cover your expences. Don't forget to factor in your loan payment.

           

          Hope this helps. My break even was a big learning experience on my plan.