This is a simple calculation which will determine how many sales you will need to make in your business before you start generating a profit.

The calculation is as follows:

Calculate your total business expenses.

This includes everything such as electricity, phone bills, rent, etc.  This can be calculated over a week, month or longer if necessary.  It is probably best to break it down into smaller portions so that you can set clear targets and sales goals for the future.

Now calculate how many sales you need to make to meet your business expenses.  This will tell you how many sales you will need to make before making a profit.  Anything above what you have calculated is considered as a profit for your business.

For example, if the total business expense per week was £15,000 and the average sale was approximately £150 every time.  Then 100 sales would need to be made on average to pay just for the running costs of the business.  If the business makes approximately 200 sales a week at £150 each, then £30,000 is generated with £15,000 profit for the business.

Monitoring and reviewing your sales will help you to implement sales targets and objectives for your team.  It will also ensure that you have enough money coming through the business to keep it running on a day-to-day basis.

This will prove if you are going to make it or break it!


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