17 December, 2013

1-5-10 finance: Breakeven

Is when: Total cumulative revenue – total cumulative expenses = Zero

-          At the start of every business, from the point of value creation, you are bleeding money without any revenue. Then after a while after launching, you start to gain some revenue, but the monthly income is still below the costs.

-          Then you reach the point where the cumulative revenue from the business = the cumulative costs you pay to keep the business running to that point of time
That is your breakeven point, the point after which you start (cumulatively) making profits 

-          Reaching the breakeven point is not a goal in itself. The most important thing about reaching breakeven point is that
-          After this point, you start to feel that you world is paying back the favor :)
-          You will enter a complete different zone of being comfortable that your business is actually wanted and desired by customers

-          And the most important: You will start aiming to achieve sufficiency; the real indicator of a successful self-sufficient business and a successful you AT LAST :)