From Surviving to Thriving: The Importance of Knowing Your Break Even
In this episode, we shine a spotlight on two powerful but often overlooked numbers every business owner needs to know: your business break-even point and your lifestyle break-even point.
I’m Deb, a Profit First Professional, and I’m here to show you why understanding these two figures is essential—not just for financial stability, but for your peace of mind and long-term success.
We’ll walk through a step-by-step process to calculate both break-even points so you can stop guessing and start making confident, informed decisions. Whether you’re in the early stages of business or looking to scale, this episode will help you align your finances with what truly matters: sustainability, security, and the life you want to live.
About the Podcast:
This episode of the Financially Healthy Business Podcast gives you the practical tools and mindset to move from financial firefighting to focused, strategic planning.
You’ll learn how your business break-even point shows you what your enterprise needs to survive—and how your lifestyle break-even point gives you the clarity to ensure your business is actually serving you.
As we wrap up, I challenge you to calculate both figures and write them down where you can see them. These aren’t just numbers—they’re your financial guardrails, helping you make smarter, faster decisions.Takeaways:
- This podcast emphasizes the importance of understanding your business's break-even point for financial clarity.
- Listeners are encouraged to calculate both business and lifestyle break-even numbers to alleviate financial stress.
- The episode discusses the necessity of knowing monthly operating expenses to maintain business viability and personal stability.
- I encourage all business owners to write down their break-even numbers to ensure they are not operating blindly.
- Understanding financial fundamentals is essential for ensuring that one's business supports their desired lifestyle.
- The conversation highlights that failing to grasp these financial concepts can lead to unnecessary stress and uncertainty.
Links referenced in this episode:
Companies mentioned in this episode:
- Accounts Ladies
- Accounts Office Academy
- Financially Healthy Business
Transcript
Foreign Healthy Business Podcast for business owners who want the confidence on cash flow that supports the life they actually want to live.
Speaker A:I'm Deb Halliday, Profit first, professional founder of award winning accountancy practice the Accounts Ladies and the Accounts Office Academy and author of how to Build a Financially Healthy Business.
Speaker A:Learn how to take control of your finances, reduce stress and grow sustainably because your business should support your life, not consume it.
Speaker A:Let's get started welcome to the Financially Healthy Business Podcast.
Speaker A:I'm your host, Deb Halliday and I'm thrilled you're here with me today.
Speaker A:We're diving into one of the most powerful tools you can use to get clarity and reduce stress.
Speaker A:Your break Big Even point.
Speaker A:But not just the business one.
Speaker A:The lifestyle one too.
Speaker A:This is about knowing exactly where your business needs to be to to keep you afloat, both professionally and personally.
Speaker A:So grab a cup of tea and let's get started.
Speaker A:Now, most business owners have heard of the term break even.
Speaker A:It's that magic number where your sales cover your costs and you're not losing money, but you're not making a profit either.
Speaker A:It's the baseline.
Speaker A:But here's the thing, very few of us actually sit down to calculate it.
Speaker A:And even fewer connect it to the life we're trying to build outside of work.
Speaker A:If you don't know your break even point, you're essentially flying blind.
Speaker A:And that's a recipe for stress.
Speaker A:Let's break this down into two key areas.
Speaker A:Your business break even and your lifestyle break even.
Speaker A:First, the business break even.
Speaker A:This is the minimum amount of sales you need each month to cover all your operating expenses.
Speaker A:Think rent, subscriptions, software tools, team costs, or anything else keeping the lights on.
Speaker A:For example, let's say your monthly expenses total £2,000.
Speaker A:That's the baseline your business needs to hit just to break even.
Speaker A:But here's where it gets personal.
Speaker A:Your lifestyle break even.
Speaker A:This is the income you need your business to pay you every month so your personal bills are covered.
Speaker A:Rent or mortgage, groceries, utilities, maybe a little buffer for a night out without dipping into savings or stressing over every penny.
Speaker A:This is to keep you stable.
Speaker A:And don't forget income tax and national insurance payments.
Speaker A:If you're running a limited company and paye, you'll have employers, national insurance on top of that and corporation and dividends tax for any dividends you withdraw to cover your personal expenses.
Speaker A:That's what a lot of people forget to take into consideration.
Speaker A:And that's your real break even number.
Speaker A:So how do you figure this out?
Speaker A:Here's a step by Step guide 1.
Speaker A:Calculate your monthly operating expenses.
Speaker A:Go line by line.
Speaker A:Rent, subscriptions, tools, team costs.
Speaker A:Write it all down.
Speaker A:2.
Speaker A:Work out your minimum owner's pay, the amount you need to live comfortably and the tax.
Speaker A:Be honest with yourself here.
Speaker A:3.
Speaker A:Add those two numbers together.
Speaker A:That's your target.
Speaker A:Now I know what you might be thinking, Deb.
Speaker A:This sounds like maths and I'm not a numbers person, but trust me, it's simpler than it seems.
Speaker A:And once you've got these numbers, you can stop guessing and start planning.
Speaker A:Your challenge this week is to work out both your break even numbers and write them down somewhere you'll see them every day on a sticky note by your desk, in your planner, wherever works.
Speaker A:Because if you don't know your numbers, you're not running a business.
Speaker A:You're winging it.
Speaker A:And we're here to change that.
Speaker A:If you found this useful, sign up for our Financially Healthy Business program where we cover this and other essential topics.
Speaker A:Wwboo.financiallyhealthybusiness.co.uk Business is hard enough without operating blind.
Speaker A:Let's get your numbers working for you.
Speaker A:Next time, we'll talk about pricing in a way that might just change how you see your business.
Speaker A:Until then, take care and see you soon.
Speaker A:Thanks for tuning in to the Financially Healthy Business podcast.
Speaker A:If today's episode helped you take a step closer to building a business that supports your life, share it with a fellow business owner, follow the show or leave a review.
Speaker A:It all helps to get the message to the people that need it.
Speaker A:For further Support, head to ww.financiallyhealthybusiness.co.uk to find out more information on my online coaching program.
Speaker A:You didn't start your business just to survive.
Speaker A:You started it to thrive.
Speaker A:Till the next time.
