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Using leverage in your business or professional practice is comparable to sailing a Spanish treasure galleon. If you remember your history, the colonial powers used ships called galleons from the 16th to 18th centuries. Spain used these ships to carry precious metals like gold and silver as well as other treasure from the New World back to the homeland.

You acquire the tools and equipment with minimum investment from your side. You do not own the equipment. Rather you get it on long term lease. You pay rental fees for using the equipment.

Although you can locate space on your own, there are many advantages to working with a commercial realtor. A professional in the field will understand the demographics of the areas you are considering and may be able to find lease space as well as buildings for sale (depending on your goal in that regard.) By the same token, you may find that leasing equipment is a better option than buying, at least in the first year. If you are taking out a small business loan, you can add lease financing for equipment loan to the terms of the agreement.

Fixed costs are things like rent, utilities, telephone, salaries, and benefits. For a basic breakeven analysis, we consider costs as fixed if they don't vary with small increments of sales. Obviously, if your sales quadruple, you would need to add staff and incur other costs that are fixed in the short term. But for the purposes of a breakeven analysis, we consider these costs to be fixed.

You may or may not have a lot of debt service. If you do have auto loans, equipment loans, or mortgages - it is a good idea to include the principal payments as part of your breakeven calculation.

Do you want an option to purchase and what would be the price? You might grow attached to the equipment and if it still might have a good life ahead it might be an option to buy it from the equipment finance company or you might want to extend the lease. Things to consider include the price, value of the equipment to base the price on and anticipated life of the equipment. It is much better to figure these items out at the beginning then at the end.

Fixed costs are now $30,000 per month. During the last 6 months, variable costs amounted to $32,000 on sales of $200,000. You calculate your "Variable Cost % of Sales" to be 0.16 ($32,000/ $200,000 or 16%) - which is for commissions and credit card fees. Your breakeven is $30,000 / (1 - 0.16) = $30,000 / 0.84 = $35,714.

Taxes can be a living nightmare for some. Trying to learn all the tax laws is often complicated and the best way to ensure that everything is done proper is to have a professional do it for you. Never take the chance when it comes to your company's well being and financial future.

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