Every business plan needs to include a breakeven analysis—a calculation based on estimates of earnings and expenses that will predict when a business will be profitable.
Earnings Minus Expenses = Profit or Loss
First, estimate your gross earnings by considering how much money you might bring in through massage fees and product sales. Then, calculate your monthly expenses. When you subtract your expenses from your estimated earnings you get an idea of what you'll need to do to breakeven.
For example, if the total is less than zero, you'll need to increase your earnings or find places to reduce expenses. If the total is zero or greater, you've reached the breakeven point or made a profit.
Massage Hours Needed Per Month
Reversing the method shown above gives you an easy way to set a target for the number of clients you need to see per month. If you start with your total estimated expenses for the month, you know you must earn at least that much in order to breakeven. Use that number to calculate how many massages you must give, as follows:
- I need $______ in total earnings in order to breakeven.
- Divide this earnings number by your hourly massage fee.
- The result is the number of massages you must give.
Establish Baseline Success Numbers
When you first start estimating your breakeven point, you'll probably find identifying expenses is easier than projecting what your revenue (in massage fees or sales of merchandise) will be. The task will get easier, however, the longer you practice. Knowing these numbers off the top of your head will help you mentally gauge on a week-to-week basis whether you are meeting your financial goals or not.
Need more information? Learn how to create and manage a budget and estimate monthly expenses.