Companies must logically be organized and subject to the most royal structure, so that their operation is as expected and raise present and future profits. The importance of an organizational structure for the success of the company will therefore be one of the bases for the execution of a break-even analysis in a company.
Since what does not have a good base collapses, knowing the basis and importance of the organizational structure of the company will be the guarantee of successful execution and supervision of the business balance point. And on this we will focus our attention below.
Balance Point What is it?
A company and its respective viability will depend directly on whether it is from a profit perspective, something profitable and sustainable, in the present and the future, for this reason strategic, tactical and operational planning is applied with its different similarities to obtain success and be able to perform a future break-even analysis.
Obtaining sufficient profit to support the business apparatus will be subject to the success of strategic planning, hence its importance, because it will guarantee obtaining the necessary income that will allow the company to face present and future expenses. without falling into bankruptcy or bankruptcy.
This midpoint is considered as the equilibrium threshold, where neither is lost nor gained. Or in other words, that is called the break-even point in finance or finance. In short, it is the supposed plausible scenario, where expenses and sales are on a par, that is, they are equal.
Importance or role of the balance point.
We will find the theory of the financial break-even point very useful, in the particular case of neophyte companies that are beginning their journey in sales, or in those that have just suffered or are shaken by low sales.
Since if at this moment of equilibrium or equilibrium point, there are no profits, there are no losses either, which is the beginning to stop the decline of capital.
From this point of view, the strict calculation of the break-even point will allow us to know at what point in the sales projection the business will be profitable, or at what point in the sales you execute, the amount invested and the profit margin begin to stabilize.
At the same time, it is also a fundamental help to know in numbers so as not to run the risk of irreparable losses for the company.
What are the advantages of a break-even analysis in a company?
The leading importance for the company has already been made clear, the calculation of the break-even point, since it helps to set prices and monitor the dynamics in action of the invested capital, but here are some more advantages:
Easy-to-read results: the analysis and calculation of the break-even point will be directly linked to profitability and its interpretation threshold.
You will be able to get a clear guide to know the moment of impasse of a sales campaign or a company’s finances. In addition to being visible in a simple way, what projections to execute to continue growing or if to stop to change.
Know the profitability in a simple way: the analysis of the business balance point, keeps the investor updated on the respective income and expenses executed on the sales of the products made with his capital. Thus, observe which of these are the most profitable due to demand factors or little manufacturing investment and increase their production.
Prevention plan: knowing the moment of materialization of the break in the finances, allows the investor to be on alert, on the supervision of the dynamics of sales.
Thus, if sales decline, it is possible to know if it is profitable to continue with production, or if it is necessary to execute a cut in operating expenses to have the same product but with less investment and balance the drop in sales due to demand.