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Do you have any idea how much money you have invested in shoeing a horse before you even pick up a hoof? Do you know how much you need to make to break-even?
The break-even point is just a portion of a larger concept known as “contributions and margin analysis,” which looks at the relationships of cost, profit and volume. The break-even point is the amount of revenue a business must generate in order to equal its expenses.
In simplest terms, it is the zero point — the point at which the business neither makes a profit nor suffers a loss.
The break-even point seems like a simple business concept, however it remains an enigma to many. Any small business owner that ignores or does not know this vital piece of information runs the risk of losing money — or failing all together.
Break-even analysis can provide a simple, yet powerful quantitative tool for farriers. It can provide you with insight into whether or not revenue or money earned from each service you provide will cover all the costs or expenses you incur performing it. It will tell you the minimum amount you need to charge per horse to break-even.
Anything below your break-even point is a loss. Anything above that point is profit. Farriers can use this information in making a wide range of business decisions, including setting prices, offering discounts, making purchase decisions and determining the number of customers needed in order to be…