Break-even analysis has been very useful to me throughout my career. “Break even” is usually defined as where revenue equals cost, so profit is zero. It’s a way to simplify a complex decision into a simple “yes/no” question. This can help people stuck in “analysis paralysis” and helps groups come to a decision more quickly.
In this video, I apply break-even analysis to the decision of whether to open a new location to show how it can help you make better decisions. In this video, I’ll:
- Explain when break-even analysis is most useful in decision-making.
- Show how break-even analysis can test the most uncertain assumptions in a decision.
- Present how to find the break-even point.