How to Calculate Your Break-Even Point (#Cashflow) Tip 2

To Make Profit, You Must Break-Even.

break-even

Day 2 of 31 Days – How to Improve Your Business Cashflow by Ezypay

The break-even point for every business varies. Essentially, it is a magic number that every gym, club or fitness center must surpass in order to be officially profitable. Mathematically speaking, your business break-even point can be determined with this formula:

Break-even  = Total business revenue – Total business cost

Where your total business cost should also include the cost of delivering your service or product, as well as other overheads or cost to do business such as phone calls, design cost, man hours, Internet connection, electricity, rent and wages. For a more in-depth explanation on calculating your break-even point, please see this post by the Queensland Government.

Once your business income figure exceeds the break-even point, you basically have successfully achieved positive #cashflow.

3 Ways to Break-Even

#1: Sell, sell, sell

There are plenty of activities and programs that can be held at gym or fitness centers to increase revenue. After all, you already have a great location, a great staff and members who are committed to improving their fitness levels. If you do decide to increase the number of classes or operation hours, be careful to also keep an eye out on your resources so you do not unwittingly raise your break-even point instead.

 #2: Keep it profitable

This refers to Tip 1 of Ezypay’s 31-Day #Cashflow Challenge. Every new activity that you implement in your gym or club should be improving your cashflow and bringing you one stop closer to overachieving your break-even point.

 #3: Experience is priceless

If you’re an aspiring owner of a gym or fitness center, consider gathering experience as a Personal Trainer within a club first. According to PTdirect.com, the profit potential vs. financial risk is actually 8-folds better (assuming that there is a fixed rental base).  Remember that to break-even, your revenue must exceed your business cost, which means that as a business owner, you must be savvy or experienced enough to know what tasks can be delayed or ignored before you successfully reach break-even point.

Need more tips? Download the full PDF here.

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