12 August 2020: For those who remember the show Breaking Bad, they’ll know that Walter White had a very clear idea of the figures that he needed to make from his new nefarious enterprise in order to provide for his family. Obviously things went pretty haywire for the formerly sensible Mr White but his clear eyed thinking regarding required returns is worth noting.
All businesses have a ‘breakeven point’ i.e. a level of income required to ensure that they can meet their outgoings. During the course of a trading period, with the inevitable ups and downs that it brings, it is easy to lose sight of the breakeven point. This is particularly the case when a business has several strands to its bow or experiences exceptional trading circumstances – such as a pandemic.
Now that the economy is slowly beginning to come back to life, although it would appear at a painfully limited pace like Jessie Pinkman trying to grasp one of Walter’s lessons on chemistry, those companies that were forced to put things on hold due to the pandemic are mostly up and running again but possibly at a fairly limited capacity. The safeguarding measures still in place in order to protect against a further Covid-19 spike, have led to many business not being able to trade as usual.
This is particularly true of cafes, bars and restaurants. With tables and chairs much more spaced out than before the number of customers able to attend premises has reduced. This of course means less income. Therefore, a business may be back up and running but what is the turnover that can be achieved and how many staff are required to provide this new limited service and can the overheads still be met?
These are the questions that businesses need to be asking themselves when re-opening. A review of their cash flows and breakeven point is going to be a key tool in understanding what can be realistically achieved during these restricted times.
If you or your clients have reviewed your breakeven point and this has caused concerns with respect to how the business can profitably trade going forward, the time to act is now. Please do contact BRI for a free no obligation, appointment in order to allow us to assist you in considering all of the potential options open with regard to maintaining a stable trading business going forward. Please be assured here at BRI we will always provide the right advice, first time every time, regardless of the fee outcome to us.