Learn The Importance Of Revenue Volume As You Work To Evaluate And Improve Your Business.

Revenue volume and break even are inseparable. And doing a break even analysis is a necessary and useful activity as you prepare your business for sale. You can use the resulting information in your sales argument, or as a starting point in making improvements.

It is as simple as it sounds. It represents the number of revenue units needed to break even. As an example, if revenue per unit is $X, knowing total cost allows you to determine how many units you need to sell to reach break even. And if you sell more units than that you will make a profit.

Most business are a bit more involved than that. There may be multiple products, or services. And each may have a different unit price. So getting to this needed number may appear to be a bit imprecise. However despite the imprecision, remember the value of being vaguely right.

Being vaguely right is enough to show you that you need to take action. It is also enough to suggest direction for your action. If you wait until you can get absolute precision, you may never get to take action.

It is important in what it tells you, and for what it allows you to do. It is a key component of a break even analysis. And as you already know, a break even analysis will provide you with much extremely valuable, actionable information.

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