Break-even and profitability planner

• Break-even revenue = monthly fixed costs ÷ gross margin. At a 70% margin, every £1 of revenue leaves 70p to pay fixed costs, so £35,000 of fixed costs needs £50,000 of revenue.
• Projection: month 0 is today. Each month, revenue grows by your revenue growth rate and fixed costs grow by your fixed-cost growth rate, both compounding. Cost of sales is revenue × (100% − gross margin), so it rises with revenue.
• Monthly profit = revenue × gross margin − fixed costs. Break-even month is the first month where this is zero or more. We look up to 60 months (5 years) ahead.
• Cash starts at your cash in bank and changes by each month’s profit or loss. The lowest cash point is the bottom of that curve before break-even. If it goes below zero, that is the month cash runs out.
• Customers needed = revenue needed in the break-even month ÷ average revenue per customer, rounded up.

Assumptions: steady growth rates, no new funding, no tax, VAT, R&D tax credits, loan repayments or timing differences between invoicing and payment. Real growth is lumpy, so treat this as a planning guide and re-run it with cautious and hopeful figures. The three-months-of-costs cash buffer used for the verdict is a rule of thumb, not a rule.