Use Break-Even Analysis to help make financial decisions

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  • Each of the financial models addresses an important financial decision in your construction business using break-even analysis.
  • Some of the models provide simple answers to straight-forward questions.
  • Other of the models are more complicated and require more inputs.
  • All of the Break-even Analysis models will require that you have:
    • Previous period Total Sales – typically your annual sales found on your Income Statement;
    • Previous period Direct Job Costs – typically your annual Cost of Goods Sold found on your Income Statement;
    • Previous period Fixed Costs – typically the costs related to running your construction business. Also called General and Administrative, or G&A, costs found on your income statement.
  • There are other financial factors you may need to generate as part of the analytical process.
  • Depending on the area of analysis, you may need to determine the:
    • Amount of the raise you are considering;
    • Target amount for profit;
    • Percentage of direct costs represented by Materials or Labor. Depending on your accounting process, you may have to make some assumptions here;
    • Target increased amount of your marketing budget;
    • Average contract price of a new project;
    • Acquisition and maintenance costs of new equipment;
    • Anticipated reductions in direct materials and direct labor costs;
    • Anticipated loan amounts and loan terms;
    • Salaries and loads for new hires; and
    • Additional information.
  • Each of the results (generally in light orange cells) will provide important information to assist you in making reasoned financial decisions.
  • Many of the models also offer suggestions or explanation of the analysis results in the blue cells.
  • Every effort has been made to provide accurate information.  However, if the input numbers or the calculations lack accuracy, please contact Builder Resources to discuss.
  • You can print pages by selecting the “Print” button at the bottom left of the analysis template.