When Major Business Blunders Happen: Learning My Break-Even Point

The 3000th bar. Photo by Danielle Vincent.

The 3000th bar. Photo by Danielle Vincent.

This was originally published at Outlaw Soaps—Pyragraph’s favorite place to get handmade soap—and is reposted here with kind permission.


In the past two weeks, I learned that I had made what I consider to be a pretty serious business forecasting error based on a simple lack of knowledge when I started the business.

I had my costs covered and got my pricing right, but I didn’t know something really fundamentally important: my break-even point.

That’s the number of units we need to sell in order to cover our expenses.

On any given day, I am forgetting something critically important.

And you might think, “OMG! How could they have just been skating along not knowing that?!?” But you gotta remember, I had savings to go through in the first year and some bridge loans to get through the second year, and this year, we had the Kiva loan … and not only that, we have been so close to the break-even point that we only really needed to cover a few hundred extra dollars in the lean months.

But this is a big deal. I wish I had known about it before.

Because I’m taking a hard look at finances before we enter the busy Christmas season, I endeavored to learn everything I possibly could about finances and business planning—not just in a superficial, gotta-get-by kind of way, but in a professionally investigative way as the CEO of our growing business.

So I downloaded the audiobook Accounting for the Numberphobic (which I definitely am) and have been listening with rapt terror as things like balance sheets are explained in painstaking detail. I hired a bookkeeper to reconcile all our books for the past three years, since my accounting has been consistent, but not the most tidy.

I decided I needed to actually step up and become the CEO, and that means looking at cash flow statements, balance sheets, and P&L statements.

And because of this, I’m going back through my business plan to re-evaluate everything.

Gonads.

This is the tip of the iceberg, my friends. I can assure you, this wasn’t the first such revelation and it won’t be the last.

The reality is this: On any given day, I am forgetting something critically important. Over time, those critically important things add up.

But what am I gonna do? Know everything? Spend all my time reading Entrepreneur magazine so I never wade into scalding hot water?

Or am I gonna freak out for a little while, go take a bath, and then regroup?

Today, I am gonna freak out for a little while. Then I’m going to take a bath. And then I’m going to rework our business plan. Again.

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About Danielle Vincent

After more than 10 years as a corporate digital product manager for such sites as Oprah.com, ABC.com, and ABCFamily.com, Danielle Vincent quit her career and pulled up her rubber gloves to make a living manufacturing and selling soaps as Outlaw Soaps. Her experience with social media, product management, web analytics, business, and design have made Outlaw Soaps into a personal experiment as she finds out what happens when she applies her largely digital learnings to the real world.

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