Break even = point in TIME when you recover all that you put in. Normally in a good business venture it’s about 2 to 3 years. So if Ben Burger has fixed cost of $200,000 investment, his revenue is $24,500/month of which 70% is variable. So his break even is $200,000 / (24,500×(1-0.7))= 27 months which is ok. A better red flag for restaurants can be calculated by reversing the formula using 60 months as the maximum break even, in which case the maximum variable cost is 85% of sales. During recessionary periods in the economy, this would be 80% and roughly = 15% rent + 35% labour + 30% COGS. This was Wilson’s original rule of thumb when he first started his TH-cam presentations.
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I got confused 😢😢 11500?
Break even = point in TIME when you recover all that you put in. Normally in a good business venture it’s about 2 to 3 years.
So if Ben Burger has fixed cost of $200,000 investment, his revenue is $24,500/month of which 70% is variable. So his break even is $200,000 / (24,500×(1-0.7))= 27 months which is ok.
A better red flag for restaurants can be calculated by reversing the formula using 60 months as the maximum break even, in which case the maximum variable cost is 85% of sales. During recessionary periods in the economy, this would be 80% and roughly = 15% rent + 35% labour + 30% COGS. This was Wilson’s original rule of thumb when he first started his TH-cam presentations.
What was the correct formula ??
What is the correct formula?
Please double check your formula, it's wrong the way you have put across .
No link for excel
3450/.30 you will get that 11,500
Please double check you formula
What is the correct formula?