What Kind of Breakeven Analysis Does Startup Financial Model Provide?
There are typically three types of breakeven metrics for entrepreneurs and startup teams to track and they will often not breakeven on the same month and they will typically jump around a bit, so you may see a few months where you swing positive and then back to negative, so often “Breakeven” is a little more complicated than just stating "this is the month we breakeven...".
Therefore, our app tracks all three of these typical breakeven measures:
Net Income - tracking overall bottom-line profitability
EBITDA - tracking profitability, but adding back interest, taxes, and non-cash charges of depreciation and amortization to get a sense for breakeven without the impact of those items
Operating Cash Flow - tracking cash flow without the impact of any investing or financing activity to give you a sense for the cash flow of your operations
Our breakeven analysis report shows you what you will typically want to know about breakeven: the month and year of breakeven, the number of products or services offerings it takes to get to breakeven, and the total revenue to reach breakeven. We also show an interactive chart of the three financial metrics over time so you can quickly and easily see the ups and downs. If you hover over any point on the chart, you can see the actual result. The report shows the first month of breakeven, but as mentioned, you shouldn't be surprised to see swings up and down until you've finally grown into solid profitability as measured by all three measures of Net Income, EBITDA, and Operating Cash Flow.
We also offer a handy Verify Cash Levels report on the Input Assumptions menu to help you quickly see the cash impact of the assumptions you've put in to make sure you do not to run the company out of cash in your plan. This report is available for both your regular scenario and your alternate scenario:
It can be rather embarrassing to present a plan to a potential investor that shows you are out of cash for several months in a row. It's very typical for a startup to go through a losses "J" curve prior to climbing up the profitability and cash flow side, but you want to make sure that you are not out of cash at the bottom of that "J" curve. Further, you should leave enough cash reserves in case you miscalculated.