Glow Pros Academy
Mini Module III
What you keep, not what you take
The Glow Edit. Business education for the aesthetic and wellness field, written from a working clinic.
Module specification
- Framework
- Break-Even Analysis, originator and year to confirm
- Field
- Management accounting
- Duration
- 10 minutes reading, 20 minutes practical
- Prerequisites
- Mini Module II is useful, not required
- Strand
- Pillar II, Profitability
- Benchmark
- National occupational standards for enterprise
On completion you will be able to
- Separate turnover, gross profit and net profit
- Calculate the contribution each treatment makes to your fixed costs
- State the point in the month at which the business starts paying you
Turnover is what arrives. Almost none of it is yours, and the gap between those two facts is where most of this industry lives.
Section A · The situation
Eight thousand in, nine hundred left
It was a good month. Genuinely busy. The bookings app said eight thousand and something and you remember feeling quite pleased.
Then the rent went out. Then the insurance, the finance payment on the machine, the software you pay for monthly and use weekly, the accountant, the consumables order, the card fees you never look at.
And what is left, once you have paid yourself something that resembles a wage, is not what a busy month is supposed to feel like.
The instinct at that point is to book more. It is almost always the wrong instinct, because the problem is not the size of the number at the top. It is what happens to it on the way down.
Section B · The theory
Three numbers, and only one of them is yours
Break-even analysis is one of the oldest tools in management accounting and one of the least used by the people who need it most. Its origins are diffuse enough that this module names the technique rather than a single author.
It asks a simple question. How much do you have to sell before you stop losing money and start making it.
Answering it requires separating three things that get spoken about as if they were one.
Turnover, gross, net
The gap between turnover and gross is usually small in this sector, which is why people assume the business is profitable. The gap between gross and net is where it all goes, and it is almost entirely invisible because it leaves by direct debit while you are with a client.
A typical busy month, as it actually behaves
Which produces the number that matters. Contribution is what one treatment leaves behind after its own direct costs, and it is the only thing that pays your rent.
Divide your monthly fixed costs by your average contribution and you have your break-even volume. The number of treatments you must deliver before the month stops costing you money.
Everything before break-even pays the building. Everything after it pays you.
Before you go on
- Without looking it up, what are your total fixed costs in a normal month? The speed of your answer is itself the finding.
- When you last put a price up, did you know what that treatment contributed before you changed it?
- If you took a fortnight off, what would still leave your account?
Section C · Mini audit
Practical
The Break-Even Audit
Use last month, and use real figures rather than the ones you would like. Include your own drawings in fixed costs. You are not a volunteer.
| Line | Figure | ||
|---|---|---|---|
| 1. Fixed costs, one monthRent, rates, insurance, finance, software, utilities, accountant, your drawings | £ | ||
| 2. Average price, most booked treatmentWhat they actually pay, after any discount | £ | ||
| 3. Direct cost of delivering itConsumables, card fee, anything that only happens because they came | £ | ||
| 4. Contribution per treatmentLine 2 minus line 3 | £ | ||
| 5. Break-even volumeLine 1 divided by line 4 | no. | ||
| 6. Treatments you actually delivered last monthCount them | no. | ||
| Line 6 minus line 5 | no. |
Section D · The reveal
What you have just done
That was break-even analysis with a contribution calculation inside it. You separated fixed from variable cost, established unit contribution, and derived the volume at which the business becomes profitable.
It maps to deciding on the financial needs of your business, and to setting and monitoring financial targets. Both are national occupational standards for enterprise.
It is also the single most common thing a small business owner has never been shown.
Section E · Your action step
Twenty minutes this fortnight. One number, written where you will see it.
Take your break-even volume and turn it into something you can actually use. Treatments per week. Or the date in the month it usually falls on.
Write it on the back of a card and put it where you do your admin. Not in a spreadsheet you will not open.
That number changes how a quiet Tuesday feels, because you stop guessing whether the month is working.
Type it here, or print the page and write it by hand.
Mini Module III at a glance
- Turnover is not profit and gross is not net
- Contribution is what one treatment leaves after its own direct costs
- Break-even volume is fixed costs divided by contribution
- Everything before break-even pays the building, everything after pays you
- A number you can see changes decisions. One in a spreadsheet does not
From the deck
Card
Break-Even Analysis
· · ·
Know the point in the month where the business stops costing you and starts paying you.
Every framework in the Glow Mastery Programme has a card. More than a hundred of them, one for each thing you learn.
The reverse carries the origin, the theory and the standards it maps to. That side comes with the deck, which arrives when you enrol.
That is three you have earned.
Reply and tell me your break-even number, and whether it surprised you.
I read every reply myself, and it decides what gets taught next.
Amelia x
Founder, Glow Pros Academy
The Glow Edit is the fortnightly mini module from Glow Pros Academy, the business education for practitioners across the aesthetic and wellness field. Written from a working clinic, not a coaching desk. This page prints on two sides of A4 if you would rather work on paper.
