Cash flow forecast: the thirteen weeks that decide whether you survive
Profitable businesses fail by running out of cash. A rolling forecast is the only thing that shows the gap coming while there is still time to do something about it.
Break-even analysis is three inputs and one division. The reason it gets skipped is not difficulty — it is that the answer is often uncomfortable, and finding out early is the entire point.
A break-even analysis works out how much you have to sell before you stop losing money. It needs three numbers: your fixed costs, your price per unit, and the variable cost of producing one unit. Everything else follows from one division, and the arithmetic takes ten minutes on the back of an envelope.
That simplicity is worth stressing, because break-even is treated as a piece of formal finance and skipped by exactly the businesses that most need it. A price set by looking at competitors, without checking what it has to cover, is a guess that takes a year to disprove.
A worked example. Fixed costs 40 000 a month. Price 500. Variable cost 300. Contribution is 200 per unit, so break-even is 200 units a month, or 100 000 in revenue. If you currently sell 120 units, the price or the cost structure has to change — and knowing that now is worth more than discovering it across four quarterly reviews.
Contribution per unit is the number worth carrying in your head, more than the break-even volume itself. It tells you instantly what a discount costs: at a contribution of 200, a ten per cent discount on a 500 price removes 50 from contribution — a quarter of it — and you need a third more volume to stand still. That arithmetic is why casual discounting damages small businesses so reliably.
Three levers, in the order they usually pay. Raise the price, which lifts contribution directly and is the change small businesses resist most — the ground covered in value-based pricing. Cut variable cost, which needs supplier work or volume. Cut fixed cost, which is slow and finite. A fourth option, selling more at the current numbers, is the one everybody reaches for first and the only one that does not change the underlying position.
Ettex Sheets is the right home for it, because break-even is a model you want to change and rerun — what happens at a five per cent price rise, at a new rent, at a bigger order. The costs behind the inputs come out of Ettex Books, and the longer-horizon version is covered in financial projections template and cash flow forecast.
To be clear: there is no break-even wizard here, and there does not need to be. The value is in the three inputs being honest, and no software can make them so — the variable cost people forget is the one that would have changed the answer.
Fixed costs divided by contribution per unit, where contribution is selling price minus variable cost per unit. The result is the number of units needed in the period to cover all costs.
Anything you pay regardless of sales volume — rent, salaries, insurance, software, and your own salary, which is the one most often omitted.
Calculate per product line, or per group with similar economics. A blended average describes a product you do not actually sell.
No. It is the floor below which you are losing money. Targets should be set from the profit the business needs, with break-even as the check that the price can get there at all.
Profitable businesses fail by running out of cash. A rolling forecast is the only thing that shows the gap coming while there is still time to do something about it.
A media plan template is a grid: channel, dates, budget, what you expect back. Its value is not the forecast in the last column — it is that everything competing for the money is visible on one page before any of it is committed.
Supply chain management sounds like something that needs a platform. At the scale most companies operate, it is five lists kept honestly — suppliers, lead times, orders placed, stock on hand, and what went wrong last time.