Break-even Point – Recreating Your Company’s Image

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Dear M & M: 

What is a break-even point in business and how do you calculate it?

– Barkley

Dear Barkley: 

Nothing is more important in business than the price you get for your products and services. You must offer your products and services at a price the market is willing to pay, yet ensure that you make a profit to cover overhead to allow you to stay in business. A company is at a break-even point when it has neither a profit nor a loss. For example it costs you $100 to produce and sell a product and you sell it for $100, you are at the break-even point – with $0 profit or loss. To determine your break-even point you must know your company’s fixed and variable expenses. Fixed expenses do not go up whether sales go up or down. For example, your rent generally speaking stays the same and does not change based on sales volume. Variable expenses do change. Factors that might affect change could be raw materials, labor and sales commissions. An example of how to calculate a break-even point from about.combusinessfinance as follows: XYZ Corporation has calculated that it has fixed costs that consist of its lease, depreciation of its assets, executive salaries, and property taxes. Those fixed costs add up to $60,000. Their product is the widget. Their variable costs associated with producing the widget are raw material, factory labor, and sales commissions. Variable costs have been calculated to be $0.80 per unit. The widget is priced at $2.00 each. Given this information, we can calculate the breakeven point for XYZ Corporation’s product, the widget. Fixed Costs/Price – Variable Costs $60,000/$2.00 – $0.80 = 50,000 units XYZ Corporation has to produce and sell 50,000 widgets in order to cover their total expenses, fixed and variable. At this level of sales, they will make no profit but will just breakeven.

-M&M

 

Dear M & M:

What are some areas I should consider when trying to change or create my company’s image?

– Avery

Dear Avery:

Marketing starts with your company’s name. Make sure it is easy to remember and that it is simple and memorable. Once you make sure someone else isn’t already using the name you chose check to see if you can use it for a web site. Color helps to brand your company, use the same style of lettering and colors consistently on everything you do. The next step would be to create a logo. Once again a logo should be easy to read and recognizable. Use your company logo on everything you do (packaging, business cards, store sign, letterhead, and email signature). Now it is time to create a company tagline. A tagline is a hardworking completion to your name. What do you do? Make in memorable. Remember you are creating your company’s image here. Another important point to remember even if your customers rarely come to your place of businesses the physical space you occupy tells something about your company. Keep it clean, keep it neat. A pleasant attitude and a simple smile each create an image. Does your store front or business location emote a pleasing and safe place people would like to go to? Look at your space and employees through your customers eyes. Do you see what you want? Are you presenting a place you would go to do business? Remember word of mouth is a powerful tool in helping to create a company’s image. Every study done shows that word of mouth is a powerful tool if used correctly to help a company create a powerful image of consumer friendliness and a place people like to do business with.

 -M&M

 

To ask your questions: Call the Small Business Development Center(SBDC) at Cochise College (520)-515-5478 or email schmittm@cochise.edu or contact the Sierra Vista Economic Development Foundation(EDF) at 520-458-6948 or email  hollism@svedf.org

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