How much money do you need for your business? To get it started and running, to pay salaries to your employees, to keep it operational, to break-even, to earn a profit! How much do you think you need?
Vakilsearch’s business calculator is an online tool for first-time (or seasoned) entrepreneurs, that answers these questions.
Our years of experience of working with several startup entrepreneurs have made us appreciate the dilemma of raising funds for a business. With this business calculator, we hope to assist and encourage more entrepreneurs to achieve his/her dream.
Vakilsearch’s business setup calculator can also help forecast annual expenditure and savings. It involves including fixed and variable elements and evaluating pricing strategy to enable the business to break even or make a profit.
It’s simple and easy to use the startup cost calculator, estimate business set up cost and calculate profit, and set you on the path to starting your dream business.
Vakilsearch’s Business Calculator is in many ways is a company valuation calculator. It considers the cost of setting up a company including capital and operational expenditure, and revenue estimation. To use the company valuation calculator or the business calculator there are a total of six steps involved;
The break-even point formula helps identify the break-even sales formula for the company or the business. In other words, the break-even point formula refers to the safest revenue margin for the business. At this point, the business can meet all its expenses and run its operations, but at zero profit. The break-even sales formula points to the total number of units sold at a particular unit price, to meet the costs (fixed and variable) involved in producing and selling those products. This because the break-even sales formula is to be considered as a business tool. In other words, using this break-even formula one can calculate when a business can be successful or arrive at a profit. The break-even formula achieves this by matching total revenues against total expenditure.
For the purpose of understanding the concept of break-even point formula, we are going to illustrate a break-even point example using unit sales price and total business set up costs.
Fixed Cost = Rs.100000
Variable Cost/unit = Rs.400
Unit sales price = Rs.500
Break even point = Rs.100000 / (Rs.500 - Rs.400)
Break-even point or units to be sold to break even = 1000
Understanding the Break-even analysis formula:
The break-even analysis formula is used to determine the units required to produce a profit. The Break-even analysis formula uses the break-even formula to calculate the units to be sold to break even. However, we also multiply the unit sales price with the respective units to be sold and arrive at the break-even point in Rupees.
With reference to the above example, the break-even point is 1000. Unit sales price Rs.500. So as per break-even analysis formula, 1000 X Rs.500 = Rs.500,000 is the break-even point in Rupees.
Now, using the break-even formula analysis we can calculate the units to be produced to generate a profit!
The break-even calculator employs the formulas used above and allows us to target the number of units that need to be produced to generate profit. In principle, the break-even calculator functions the same way as a gross salary calculator. The gross salary calculator takes into account a person’s fixed components of a salary and the variable components. The gross salary calculator then calculates the number of days to pay out the gross salary. Now, in the case of break-even point calculator, you need to take into account the profit you want, to calculate the units you need to produce.
Break-even point (Units to be sold for desire profit) = (Profit needed in Rupees / Unit sales price - variable cost per unit) + Break-even point (Units to be sold)
Taking into account the above Break-even point example;
₹10000/(₹500-₹400) + 1000 = 1100 units
The break-even calculator, with the break-even point formula, establishes the relationship between pricing and online business startup costs incurred in sales and production. As a business owner, this is useful information, as it helps in running a cost-volume-profit analysis, break-even analysis, and sales-profit analysis. This helps the business owner to not just establish the costs involved in setting up a business, but also plan on producing and selling the required number of units to break-even, and make a profit.
Vakilsearch’s business setup calculator is a fantastic tool to figure out the funds required to set up your business. You can use the business calculator to not just figure how to break even, but also how to target the profit you desire. It can be an essential tool when it comes to fundraising and one that can be relied upon for new or seasoned entrepreneurs.
You can divide your sources of income into these four fields that we have provided (for example, if you sell mugs and offer a customised print at an extra fee, you can enter income from basic sales and customization separately).
sources of income that are secondary but nevertheless help your business. They include interest on money you've deposited in the bank or different grants and donations your company receives.
You only need to fill this part if you haven't yet launched a business. These expenses, which are the start-up charges of starting your firm, cover items like furnishings, equipment, first marketing, and the price of putting up an initial inventory.
Because you could want to divide it into a few subcategories for benefits or commissions your employees receive, it appears as a separate expense category.
It Includes any additional costs you anticipate incurring throughout the course of your business. All of these charges, including rent, utilities, insurance, leases, travel expenses, and office supplies, reduce your monthly budget balance.
Startup costs represent the total amount incurred when opening a new business. Since every firm is unique, several forms of startup expenditures are needed. Businesses that operate online have different demands than those that operate offline, just as coffee shops have different needs than bookstores. However, a few costs apply to the majority of business models.
A business plan, which is a comprehensive outline of the new company, is crucial to the startup process. A business plan requires that you take into account the various initial expenditures. Underestimating the business startup costs inflates predicted net profit, which is bad news for any owner of a small firm.
Before beginning a firm, careful market and consumer research must be done. Some business owners decide to work with market research companies to help them with their evaluation process.
Any type of business needs capital to get started. For a firm, there are two ways to get money: equity financing and debt financing. Most small businesses do not often issue stock as part of equity financing, so they choose debt financing.
Calculating the startup costs for a small business requires both research and calculation. To calculate your startup costs, follow these five steps.
Start by outlining your initial costs, but don't stop there. As your business approaches launch, do some research on the costs you expect to incur.
Make a note of the average cost for each category once you've created a list of your company's requirements.
To find out how much it costs to register a business and obtain a license, contact the state's government authorities. You can reach out to us to get an idea of the equipment and supply expenses. You may decide to reserve a fraction of your overall spending plan for other common expenses.
After calculating your costs, divide the list into the one-time and ongoing expenses. Ensure that the average monthly cost is reflected in all ongoing costs. Add up your one-time costs, then multiply them by the number of months left before launch.
Your startup may encounter delays and setbacks even if you have a solid business plan in place. Give your expenses some breathing room to make sure you have had enough cash to keep your business afloat. Budget for enough cash flow to keep your company operating for up to a year after the intended launch date.
Run your computations one last time. To assist in creating a pricing structure for your goods and services, take into account both fixed and variable costs. To assist you project when your business will start to turn a profit, include your startup costs in your business plan. Your expense sheet can also be used to determine the available financing choices from banks, investors, and venture capital firms.