The ‘break even’ point is that fine point where no profit is made. Cash flow, too, can be negative at this point.
Profit margins are under pressure from inflation. Significant increases in materials, wages, energy and rent must be recovered in sales. That means maintaining margins or reducing costs.
Sales reflect demand, what purchases are willinhere to pay and in times of inflation, are able to pay. We margins cannot be maintained, costs have to be reduced.
The ‘break even point’ must be positive. Or the future outlook for a business enterprise will be negative. Making sure at least ‘breakeven’ is achieved is essential to overcome the inflation ‘devil’.
Difficult times for business owner. But, be aware of the inflation ‘devil’ and the need to maintain margins.