Conducting a breakeven analysis on your business can help you with setting targets and providing a goal to shoot for.

This analysis is important for determining how much GCI [Gross Commission Income] you need to be making on a monthly basis to stay profitable.

For the full breakdown you can watch the video or read the transcript below:

transcript from Craig’s breakeven analysis

I’ve recently been having some conversations with clients about targets in their business and what they should be shooting for.

One way we can find those targets is through a breakeven analysis, which helps us understand how much GCI you need to achieve in your business to make all the cash outgoings that you need to meet month to month.

We do this by, first of all, starting to understand what’s the fixed costs you have to pay in your business every month? And you take away the fixed revenue. So, businesses that have got property management portfolios, they’ll have a fixed amount of income that comes in every month, which can offset some of the monthly fixed costs. We can now see how much you’ve gotta make every month to keep the doors open.

Then, we start to look at what the variable costs are within your business. GCI normally comes with having to pay a sales agent. Now, most businesses have varying sales structures, where you pay your agents a different amount for every dollar of commission they write. Just to keep this relatively simple, let’s say for every dollar of sales commission you write you pay 50% to your sales agent. That basically means you’ve gotta write $2 of sales commission to keep $1 in your business.

We’re starting here from a cost perspective. Every time we write some commission costs go up for the money that’s paid out to our sales team. The revenue starting from down here from a GCI perspective, it’s going up, and up, and up. And at some stage, it crosses the line of where our costs get to.

Now, that’s your breakeven point. Anything below this number of GCI is you losing cash every month. Anything above is making cash. Once you understand what that breakeven point is you can then roll that across your business. And know that, for example, it might be $250,000 GCI every month you need to make. You’ve got a sales team of 10 people. You need an average of $25,000 of sales commission from each agent every month.

Now, this is a really high level to look at it. We get right into the weeds, right in the detail with our clients. Because it’s really important to understand all the levers that you can pull to make a difference in that GCI calculation. But I think it’s really worth doing in your business so that you can set yourself some good targets and target to be profitable.

If you’d like to find out further information about conducting a breakeven analysis in your business, please don’t hesitate to reach out to myself or the businessDEPOT team at 1300 BDEPOT.


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