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28 • The 100 Greatest Ideas for Building the Business of Your Dreams
sis. If you have collected all the information above you know your fixed costs or
overheads and you know your gross margins on each product fairly accurately. Di-
vide the fixed costs by the gross profit margin per unit to find the number of units
you need to sell just to break even. Multiply the number of units by the selling price
and you have the value of sales you need to cover your overheads with your gross
margin. Divide this figure by 12 and you know what level of sales per month you
need to make sure that your turnover covers all your fixed and variable costs for a
month. Keep updating this, as there will inevitably be changes in all the figures,
particularly gross margin.
You can use the same analysis to calculate what level of sales you would require
to cover, for example, capital expenditure or taking on more people.
