BigPicture Example Series: Breakeven Analysis

In the BigPicture Example Series, we’ll show you different ways you can make BigPicture work for you.  You can check out all these example files with your copy of the BigPicture software, which you can download here. Get BigPicture today and start playing with these fun and informative example models. The possibilities are limitless.

The BigPicture Breakeven Analysis map illustrates the elements of a company’s breakeven analysis. According to the U.S. Small Business Administration,

“Breakeven analysis is used to determine when your business will be able to cover all its expenses and begin to make a profit. It is important to identify your start-up costs, which will help you determine your sales revenue needed to pay ongoing business expenses.”

This calculation is integral to business plans, particularly for start-ups. Anyone tackling this task can benefit from starting with a BigPicture map, which will help the decision maker understand the various aspects of the problem. These include the inputs to the problem (monetary values and other inputs), the decisions involved, any uncertainties, and important outputs:

breakeven analysis1

 

Normally, problems like this one are represented, and solved numerically, by Excel tools, such as Goal Seek. However, a map like the one shown here is useful as a preliminary step to a formal analysis. It lets decision makers see the important issues in the decision problem and how they are related.

Check out the full example model in BigPicture’s ‘Example Spreadsheets’ section under the Help menu:

BP example files location

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