1
00:00:00,003 --> 00:00:03,003
- Breakeven analysis and business ratios.

2
00:00:03,003 --> 00:00:05,001
Let's take a second to show the investors

3
00:00:05,001 --> 00:00:07,007
that despite any speculation with our numbers,

4
00:00:07,007 --> 00:00:11,000
we know for certain, at a minimum, our breakeven threshold,

5
00:00:11,000 --> 00:00:14,001
and that we strive to hit that each month.

6
00:00:14,001 --> 00:00:15,008
You'll want to show potential investors

7
00:00:15,008 --> 00:00:17,006
that our goal is realistic.

8
00:00:17,006 --> 00:00:19,008
To do so, you're going to write a statement

9
00:00:19,008 --> 00:00:22,004
about how the company will achieve the breakeven points

10
00:00:22,004 --> 00:00:23,007
and win.

11
00:00:23,007 --> 00:00:25,007
It's also important to list some of the reasons

12
00:00:25,007 --> 00:00:27,008
the company may miss a breakeven threshold

13
00:00:27,008 --> 00:00:29,004
in any given month.

14
00:00:29,004 --> 00:00:32,001
A sample opening could be something like this.

15
00:00:32,001 --> 00:00:34,007
Even though the goal is to reach the breakeven level

16
00:00:34,007 --> 00:00:37,006
every month as early in the month as possible,

17
00:00:37,006 --> 00:00:40,003
it is unrealistic to believe that the breakeven point

18
00:00:40,003 --> 00:00:42,004
will be achieved every month.

19
00:00:42,004 --> 00:00:45,002
Numerous factors can cause a monthly loss.

20
00:00:45,002 --> 00:00:47,003
Closely following the financial statement

21
00:00:47,003 --> 00:00:50,006
review plan section found earlier in this business plan

22
00:00:50,006 --> 00:00:54,005
normally eliminates sustained monthly loss trends.

23
00:00:54,005 --> 00:00:56,007
Sustained loss trends are usually caused

24
00:00:56,007 --> 00:00:59,001
by uncontrolled revenue decreases,

25
00:00:59,001 --> 00:01:01,002
uncontrolled expense increases,

26
00:01:01,002 --> 00:01:03,009
or a combination of both.

27
00:01:03,009 --> 00:01:06,008
A few examples of contingent reasons for missing the goal

28
00:01:06,008 --> 00:01:09,007
could be initial months of startup operation,

29
00:01:09,007 --> 00:01:12,007
periods of seasonally slow revenue generation,

30
00:01:12,007 --> 00:01:14,008
consecutive months in which irregular

31
00:01:14,008 --> 00:01:17,005
or unusually large expenses occur,

32
00:01:17,005 --> 00:01:20,004
months immediately following a strategically planned

33
00:01:20,004 --> 00:01:23,005
expansion of staff, or increases in payroll

34
00:01:23,005 --> 00:01:25,001
that are not immediately offset

35
00:01:25,001 --> 00:01:28,004
by an increase in productions, sales or profit.

36
00:01:28,004 --> 00:01:31,004
Once a continuous negative trend has been identified,

37
00:01:31,004 --> 00:01:34,005
immediate action to reverse sustained monthly loss trends

38
00:01:34,005 --> 00:01:37,007
caused by uncontrolled factors will be taken.

39
00:01:37,007 --> 00:01:39,002
Actions that will be considered

40
00:01:39,002 --> 00:01:42,000
include initiatives to reduce expenses,

41
00:01:42,000 --> 00:01:45,004
increase profit margins, increase sales,

42
00:01:45,004 --> 00:01:48,000
enact control and review procedures,

43
00:01:48,000 --> 00:01:50,009
or any combination of these initiatives.

44
00:01:50,009 --> 00:01:54,000
Now, you'll want to include a small table like this

45
00:01:54,000 --> 00:01:57,002
to show what the company's breakeven analysis consists of

46
00:01:57,002 --> 00:01:59,000
from a number standpoint.