I will begin today’s conversation, it would seem, from a completely different, but, believe me, very important point. Many mistakes are made by both beginner and existing entrepreneurs when planning their business, when they ineptly try to use the knowledge gained from academic textbooks in their calculations, and almost all textbooks on business planning and economic analysis have a section devoted to the so-called break-even point business. The essence of it (section) is as follows. All expenses (textbooks “tell us”) are divided into variables and constants.
Variables are those expenses that increase in proportion to the growth of production or sales. As a rule, they include the costs of raw materials and supplies, the purchase of goods, piecework wages. And constant – this is the part of the costs that does not depend on the volume of production or sales (AUP salary, rental of premises, utility costs for the office, stationery, etc.). Continue reading