While the objective of break even calculations is to determine how many units or dollars worth of product need to be sold to cover all costs, the objective of target volume calculations is to determine how many units or dollars are required to achieve a certain profit objective.
The 3 legged chair
We make all the contributing KPI metrics visible and updated weekly. Profit Dynamics is about clear understanding of the factors influencing profitability. It’s then a game of increasing sales, production and cash flow to create a stable increase in each area to facilitate sustainable growth. Nothing worse than creating a huge volume of sales, only to learn you can’t actually complete the work in time. Businesses can damage their reputation with unstable growth. So it’s a bit like a 3 legged chair. Each leg needs to be growing in balance with the other two to keep the chair a stable one.