{"id":5220,"date":"2016-04-04T10:47:58","date_gmt":"2016-04-04T15:47:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/starting-a-business\/how-to-do-a-break-even-analysis-before-starting-your-business.html"},"modified":"2026-05-11T14:32:00","modified_gmt":"2026-05-11T19:32:00","slug":"how-to-do-a-break-even-analysis-before-starting-your-business","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/how-to-do-a-break-even-analysis-before-starting-your-business.html","title":{"rendered":"How To Do a Break-Even Analysis before Starting your Business"},"content":{"rendered":"\n
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How To Do a Break-Even Analysis Before Starting Your Business<\/h1>\n\n
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\n By Amber Sheppard, Esq.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Key Takeaways<\/h2>\n

A break-even analysis determines financial level where total revenue equals total costs, resulting in zero profit or loss. Knowing the proper way to conduct a break-even point analysis helps entrepreneurs determine how much income they need to cover expenses and make a profit.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

The break-even point<\/span> is the point at which total revenue<\/span> and total cost of doing business are equal. Determining a break-even point<\/span> by conducting a break-even analysis<\/span> is critical to any\u00a0business plan<\/span><\/a>. Entrepreneurs<\/span> use this financial analysis<\/span> to determine if their new business<\/span> idea can succeed.<\/p>\n

This article explains how to calculate the break-even point<\/span> for the business idea you\u2019ve chosen for your startup<\/span> business.<\/p>\n

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What a Break-Even Analysis<\/span> Can Tell You<\/h2>\n

A break-even analysis<\/span> is applied in many different situations in business, from stock and options trading to project budgeting. Doing a break-even analysis<\/span> helps a small business<\/span> owner avoid investing in product lines<\/span> or business ideas that have a slim chance of\u00a0being profitable. It helps an investor see when they may begin to recoup their investment.<\/p>\n

When used in the context of a startup<\/span> business, a break-even analysis<\/span> calculation can help:<\/p>\n