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BE.DOC "BreakEven" ----------- Version: 1.02 A Planning Tool for Small Business Owners DOCUMENTATION ------------- Thomas J. Carnegie 14350 Chadbourne Drive Houston, Texas 77079 Copyright (c) 1989 - Thomas J. Carnegie - All Rights Reserved BreakEven Page 1 BreakEven - Version 1.0 "BreakEven" is the copyrighted property of Thomas J. Carnegie and is being provided as "Shareware". You are hereby granted a limited licence to use, copy and distribute "BreakEven" to others as long as the following conditions are met: (1) This product must not be sold, or any fee charged for copying and distribution, beyond your actual cost of copying media. (2) This product may only be distributed in its original, unmodified state. (3) The following five files must be included along with BE.EXE in any copies that you may distribute to others: BE.DOC BE.REG BE.BAT INSTALLH.BAT README.TXT (4) Permission is granted to upload this product any BBS only in its original archived form as BE.ARC which includes this documentation and all of the above files. (4) This product may not be distributed as a part of any commercial product or service without the prior written consent of the author. As long as you are prepared to adhere to the conditions listed above, you are encouraged to copy and distribute "BreakEven" to your friends and others. THE CONCEPT OF SHAREWARE "Shareware" (also referred to as User Supported Software) is a distribution method used to provide the public with useful software at a very low cost. It involves a low cost distribution method for the author and a low purchase price for the user. It also allows a user the opportunity to try out the software and see if it meets their needs before they decide to become a registered user. If you continually use the program beyond the "tryout" stage, you're not being fair to the author who put years of experience and many hours of labor into the production of the program. Your contribution will also encourage the author to improve this program and develop others. The registration fee for this program is $15.00. Please see information regarding registration at the end of this documentation. BreakEven Page 2 "BreakEven" "BreakEven" is a program designed for small business owners or aspiring owners to help them in their business planning. There are two main options in the program: A) Designed for those businesses where there is a multiple product line and it's difficult to determine the unit costs or expenses involved with an average unit. B) Designed for those businesses where there is only one product or service and it is desirable to establish break even points in terms of unit quantity. What can you do with BreakEven: - Find the breakeven point of a business operation with minimum input. - Do "What-If?" calculations to instantly see the effect on the net profit of changes in sales revenue, variable costs, fixed costs, gross margin percentages, etc. - Import data listings into Lotus 1-2-3 using the /File Import and /Data Parse commands. From there, a graph can be produced to show the break even point where total sales revenue = total costs (total fixed costs + total variable costs). - If you want to know the revenue required or the unit sales required to break even AND produce a certain desired net profit, then simply add that desired net profit to the fixed costs before running the calculations. Option Choice and Help Choice of option is made from a main menu screen where you can also choose General Information about break even point and break even analysis. It is suggested that you read this information before trying out either of the options. Once an option is chosen you are taken to a second layer menu screen where the various choices for that option are listed. Choice is made using the Function Keys. Help Screens There are three sets of help screens included in the program. The first is a set of basic general information type screens, reached from the main menu that primarily deal with what the break even point is, where the numbers come from and what BreakEven Page 3 they mean and tell you a little bit about the two options contained in the program. Once you have chosen either Option A -or Option B -there is a separate set of help screens for each option. Those for Option B - include examples of how you can use this option to figure out the answers to a variety of break even related business problems. such as a raw material cost increases, can a wage increase be made without increasing selling price, investing in more plant or equipment, hiring more people and maintain a given net profit? In general the help screens are intended to assist those who might not be too familiar with what they may see and after you become familiar with the program, you'll probably by-pass them and directly enter your input data. Input The input for each of the options varies somewhat, for Option - A, the input is simply Gross Sales Revenue, Gross Margin Percentage and Fixed Expenses. For Option - B, the input required is Fixed Expenses, Variable Cost per Unit and Selling Price Per Unit. Output The output from both options is similar except that in Option - A, after entering your data you are immediately presented with an abbreviated Operating (Profit and Loss) Statement showing Gross Sales Revenue, Cost of Goods Sold, Gross Profit, Expenses, and Net Profit along with the percentages of sales revenue that each item represents. The break even point in dollars of sales revenue required for break even is also shown. In Option B - The P&L Statement is similar except that you are asked to input a unit quantity at which you wish the P&L calculated. This P&L shows the quantity used for calculation, the break even point in dollars and in units. Both options include a choice of printing a list to show where the business will be either above or below the break even point. These listings can be useful in setting sales and/or production targets as they show the profit/loss at specific user supplied points in terms of either units or dollars of sales revenue. Sample P&L Statements of typical output are as follows: Sample Output from a Option A - with input as follows: Input: Net Sales Revenue: 123456.78 Gross Margin %age: 65.4 Fixed Expenses: 34567.89 BreakEven Page 4 "BreakEven" ================================================= Net Sales Revenue: $123456.78 100.00% Cost of Goods Sold: $57090.00 34.60% ------------ Gross Profit: $80740.73 65.40% Expenses: $34567.89 28.00% ------------ Net Profit: $46172.84 37.40% ================================================== Revenue Required For Break Even: $52856.10 ================================================== Sample Output from a Option B - with input as follows: Input: Fixed Expenses: 30000 Variable Costs Per Unit: 17.50 Selling Price Per Unit: 35.00 Unit Quantity to Calculate: 5000 "BreakEven" ===================================================== Based on Input Unit Quantity of: 5000 Net Sales Revenue: $175000.00 100.00% Cost of Goods Sold: $87500.00 50.00% ------------ Gross Profit: $87500.00 50.00% Expenses: $30000.00 17.14% ------------ Net Profit: $57500.00 32.86% ===================================================== Revenue Required For Break Even: $60000.00 Unit Quantity Required For Break Even: 1714.29 ===================================================== Although the two P&L Statements are similar, you'll note that the input is quite different and the output is somewhat more detailed with Option - B, where the unit quantity becomes a factor and is highlighted. BreakEven Page 5 Either of these P&L Statements can be re-run with changes to some or all of the figures. The advantage of doing this, is that you can quickly see the effect of a change in sales revenue, gross margin, variable or fixed costs on the bottom net profit line. This can be of great help in determining objectives for both revenue and expense and in developing a projected Operating (profit and loss) Statement for a business plan or loan application. Listings With BreakEven you can produce listings from Option A - that shows showing the Sales, Total Costs and Profit/Loss for a user supplied range of revenue figures. These lists can be as short or as long as you like, in the sample shown here we used a range of from $0.00 to $150,000.00 with an increment of $15000.00 but you could use any range that might be appropriate for your business and the range you want to take a closer look at. Option B - also produces a listing but the column headings include, in addition to the above, units and unit cost. The range in this option is chosen by units rather than sales revenue. Samples of both types of listing are provided to give you an idea of the kind of output to expect. You may end up doing some experimenting to get just the right listing in the right range for your particular business. What you'll want can vary widely depending on the specific business involved. Listing from Option A: "BreakEven" ========================================================== Total Sales Total Costs Profit/Loss ========================================================== $0.00 $34567.89 -$34567.89 $15000.00 $39757.89 -$24757.89 $30000.00 $44947.89 -$14947.89 $45000.00 $50137.89 -$5137.89 $60000.00 $55327.89 $4672.11 $75000.00 $60517.89 $14482.11 $90000.00 $65707.89 $24292.11 $105000.00 $70897.89 $34102.11 $120000.00 $76087.89 $43912.11 $135000.00 $81277.89 $53722.11 $150000.00 $86467.89 $63532.11 ========================================================== Revenue Required for Break Even is: $52856.10 ========================================================== BreakEven Page 6 Listing From Option B: BreakEven ANALYSIS ============================================================================= Total Sales Total Costs Units Unit Cost Profit/Loss ============================================================================= $0.00 $30000.00 0 $0.00 -$30000.00 $17500.00 $38750.00 500 $77.50 -$21250.00 $35000.00 $47500.00 1000 $47.50 -$12500.00 $52500.00 $56250.00 1500 $37.50 -$3750.00 $70000.00 $65000.00 2000 $32.50 $5000.00 $87500.00 $73750.00 2500 $29.50 $13750.00 $105000.00 $82500.00 3000 $27.50 $22500.00 $122500.00 $91250.00 3500 $26.07 $31250.00 $140000.00 $100000.00 4000 $25.00 $40000.00 $157500.00 $108750.00 4500 $24.17 $48750.00 $175000.00 $117500.00 5000 $23.50 $57500.00 ============================================================================= $60000.00 $60000.00 1714.29 is the BREAK EVEN Point ============================================================================= The above Break Even Point is based on input as follows: Total Fixed Costs: $30000.00 Variable Costs Per Unit: $17.50 Selling Price Per Unit: $35.00 ============================================================================= The Option A - listing was run using a zero base from $0.00 revenue to $150,000.00 with $15,000.00 increments. The Option B - listing was run using a zero base for units up to 5000 units with an increment of 500 units. You can pick the range and increment you want to use for either option. Printing To Printer and/or DiskFile Any of the output you see on the screen can be printed either to your printer or to a diskfile by choosing the printer option from the menu. Because the range and increment as well as the basic input, you'll be asked to re-enter some of your data if you wish to make a printed copy or a diskfile. If you decide to print several alternatives to a diskfile, remember to use different filenames or you'll overwrite a previous file with the same filename. When you print to disk, the resulting file is a standard ASCII text file that can be brought into most word processors and edited or re- formatted as you may desire. This gives you more flexibility in being able to include one or more of these charts in a specific place in your business plan or loan application. BreakEven Page 7 Summary We sincerely believe that BreakEven can be a most useful management tool for the existing or aspiring small business owner. Not only can it be used for start up planning it can be reused as required to see any trend that may be developing that needs a management decision. It is a great tool to use to play "What If?" as you can get an immediate answer to a variety of common business questions regarding changes in sales revenue fixed and variable costs and their inter- relationship in affecting the bottom line. Registration If after trying out "BreakEven", you feel you would like to become a registered user, please fill out the form on the following page and send it with your your check for $15.00, (Texas residents, please add $1.20 for Sales Tax) to: Thomas J. Carnegie 14350 Chadbourne Drive Houston, Texas 77079 Registration entitles the user to receive notification of any updates or enhancements we might make to "BreakEven", and any other programs we might develop. Registered users may also obtain a copy of the latest version of "BreakEven" (without the closing screen encouraging registration), by mailing us a formatted diskette. The program will be copied onto your diskette and returned to you postpaid. At the same time, we would be interested in receiving any comments or suggestions you may have regarding the program, or any improvements you can suggest that might make the program more worthwhile to you. Even if you don't register, we would still appreciate your comments and suggestions. You may also send your comments and suggestions to us by way of CompuServe E-Mail. Our User ID# is [70267,2126]. In any case, I sincerely hope that you find "BreakEven" to be a useful program that will help you in managing your business or in developing plans to set up your own new small business. Tom Carnegie R E G I S T R A T I O N F O R M "BreakEven" - Version: 1.02 Registration for "BreakEven" is $15.00 (Texas residents add $1.20 for State sales tax). If you care to receive a copy of the latest version of "BreakEven" or even a copy of this version without the long running closing screen, please send us a formatted floppy disc, along with your registration fee, and we'll make you a copy and return it to you postpaid. ______________________________________________________________________ Please Complete the following: Date:_________________ Last Name:_________________________ First Name:______________________ Company (if any):_____________________________________________________ Address:______________________________________________________________ City:_____________________________ State:______________ Zip:__________ ______________________________________________________________________ Where did you receive this program?___________________________________ Any comments or suggestions for improvement:__________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ Please mail the above together with your check to: Thomas J. Carnegie 14350 Chadbourne Drive Houston, Texas 77079 Thank You!