Break-Even Stress Test
Your break-even point, your margin of safety, and how many months you survive if revenue drops 10–40%.
Example scenario—not a forecast or verified benchmark. Enable JavaScript to edit inputs, view charts, save locally and export your analysis.
Example inputs
- Average monthly revenue
- 250,000
- Variable costs as % of revenue
- 55
- Fixed costs per month
- 95,000
- Cash on hand
- 300,000
- Undrawn credit line available
- 100,000
- Fixed costs you could cut within 60 days
- 15
Example results
Break-even is $211K/month (15.6% margin of safety); at a 40% revenue drop your $400K of cash and credit lasts 14.5 months.
- Break-even revenue (monthly)
- $211,111
- Margin of safety
- 15.6%
- Survival at -40% revenue
- 14.5 mo
- Current monthly operating profit
- $17,500
- Contribution margin
- 45%
- Revenue drop survivable for 12 months
- 45.2%
- Operating leverage
- 6.43x
What stands out
Margin of safety: 15.6%
Revenue can fall $39K/month (15.6%) before you stop making money. That is a reasonable cushion.
High operating leverage (6.4x)
A 10% revenue drop cuts operating profit by about 64%. Fixed costs make profit very sensitive to sales.
A 40% drop burns $28K/month
Your $400K of cash and credit lasts 14.5 months; with a 15% fixed-cost cut it lasts 30.2 months.
You can absorb a 45% revenue drop for a full year
That is the sustained decline that would use up all cash and undrawn credit in exactly 12 months, with no cost cuts.
Next actions
- Lower break-even: every $10K/month of fixed cost removed cuts break-even revenue by $22K/month. Target a margin of safety above 20%.
- Pre-write the 15% fixed-cost cut list now (names, dates, owners) so it can be executed in days, not weeks.
- Secure or expand the credit line while profitable; lenders tighten when revenue is already falling.
Model assumptions & limitations
- Assumes variable costs stay a fixed % of revenue and fixed costs stay flat as revenue falls (no automatic cost flex).
- Survival months assume all cash and undrawn credit can be used to cover losses; in practice keep a minimum operating buffer.
- Fixed-cost cut % is your own estimate and assumed to take full effect immediately in the 'with cuts' scenario.
- Ignores timing of collections and payables; use a 13-week cash flow forecast for week-by-week liquidity.