Lowering expenses can be a good thing, if you’re cutting out non-value added extras. On the flip side, cutting costs can be detrimental to your business. I know, you think I’m crazy. Right? Think about it for a minute. Your business is successful because you offer a product or service that others value and want to purchase. Your customers have come to expect a certain standard from you and expect your product and/or service to meet or exceed this standard. Sadly, cutting costs can have a negative affect on your customers.
The break even point (BEP) is the point when your revenues are equal to your costs. When this point is reached, there are no gains or losses, you break even. Keep in mind, this point is reached during the normal course of business – your company has sold some products/services and your business has incurred some expenses.