Can the numbers support the business?
Use a selling price, direct cost, overhead estimate, and owner compensation target. See how many sales the business would need before you commit to a model.
Contribution per sale = selling price minus variable cost.
Break-even sales = monthly overhead divided by contribution, rounded up.
Sales for target = overhead plus owner compensation target, divided by contribution, rounded up.
What belongs in each input?
| Input | What to include | Check before relying on it |
|---|---|---|
| Selling price | The expected collected amount for a typical completed sale. | Discounts, sales tax collected for government, refunds, and unpaid invoices. |
| Variable cost | Materials, job labor, subcontractors, transaction fees, job travel, and other delivery costs that change with sales. | Include labor burden. Do not treat your labor as free or count it twice. |
| Fixed overhead | Recurring rent, software, insurance, administration, and baseline operating expenses. | Allow for seasonal costs, annual bills, debt, and maintenance reserves separately. |
| Owner compensation | The amount you want the business to support for your work before personal taxes. | This is not a guaranteed wage, accounting profit, or after-tax take-home figure. |
Check capacity and cash next.
If the target needs 26 jobs a month, can you safely deliver 26 jobs? If customers pay 45 days after delivery, how will you cover payroll and materials? Test those questions alongside the break-even math.
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SBA: calculate your startup costs explains how to organize costs before launch.
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