Estimating break-even allows you to determine your necessary sales per day, per month and per year. Then you can compare that with realistic estimates of the sales you might expect. If your market assessment and financial analysis lead you to believe that your new business idea has potential, you next need to avoid the pitfalls that frequently capture the unwary small business person. Often the most serious involve an incomplete understanding of the financial implications of a small business. Get a good accountant and take his or her advice.
Most people try to borrow the minimum amount of money possible and forget about working capital.
If you borrow short term, you may eliminate your ability to generate working capital. The second major pitfall is not sticking to the plan. You need to be flexible and carefully plan ahead - particularly in terms of cash management. If sales change, you need the courage to change your cost structure to keep pace. It is better to have your. cost chasing your revenue than your revenue chasing your costs.