Too often, entrepreneurs forget that good management is based at least on the margin and that its calculation is necessary (at least once). The business manager has often focused on the product and its distribution channel, but what about the neutral point? Generally in these situations, the company started its activity without a Business Model or Business Plan, which nevertheless represents the elementary foundations.
The key figure (2025): According to recent analyzes by Bpifrance, the absence of margin management remains one of the three main causes of failure of VSEs/SMEs in France.
An oversight that can lead to terrible consequences
In 99% of cases, the manager locks himself into a low price strategy (low-cost). It navigates without a budget forecast, the most basic management tool. This lack of technical visibility generates serious errors:
This leads to errorsbasic management rs like:
- Poor commercial negotiation both in purchasing and selling;
- An erroneous methodology in the treatment plan;
- Poor perception of the situation in the event of tight flow.
How to deal with it?
To help you see more clearly, you must answer the questions asked below:
- Who are the prerequisites for determining the calculation of the break-even point?
- By definition the gross and net margins of your activity.
The first question: did you establish a Business Model and a Business Plan when you launched your activity?
- If yes to the previous answer, are these documents updated and analyzed?
- Otherwise to the previous answer, study the questions asked below!
Study your products (especially your sales)
The first question to ask remains regarding the turnover forecast for the financial year. If you have established this, you must check the number of products listed as well as the number of customers. Do not hesitate to update your forecast according to thecu and in particular future hypotheses because the budget of business creators has often been established on a hypothesis which was high. The results obtained therefore allow you to displayiner all the income that you will generate because you have better knowledge of the field.
Now comes the turn of the charges. It is then a question of asking yourself what your direct and indirect activity costs consist of. The second question consists of checking your fixed and variable structural costs, in other words those which are directly affected by your sales and those which remain even if you do not sell anything. It is then a question of asking yourself whether the price of your services is based on fixed prices or on man-time.
Advice : Adjust your figures according to the reality on the ground. Creators often overestimate their initial assumptions. Better market knowledge allows you to refine your real income.
Next comes the examination of the charges:
- Direct and indirect charges: What are they made of?
- Fixed and variable charges: Distinguish those linked to sales from those which fall even without activity.
- Pricing model: Invoice yourself as a flat rate or according to the time spent (men’s time)
To finalize the work
If you have answered all the previous questions, you know how to master the concepts of margin calculation and you can easily determine your breakeven point.
If you have not answered all of the above questions, it is important to look into this as you may never be profitable because this often demonstrates that you do not know your break-even point.
In all cases, we invite you to list the following data in your tax return and to establish the EBE (Gross Operating Surplus) to Turnover (CA) ratio. The percentage found will allow you to visualize the evolution of your activity.
