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Turning a month's break-even into a number somebody can check tonight, reading a part-finished month against it, and working out what the rest of the month needs.
Paper packet. Every task here also exists on screen, where it is checked automatically; answers written on paper are not assessed by Nydus. When you are back at a device, enter your answers there.
You will turn a monthly break-even or target into a weekly and a daily figure by dividing by trading days, state it in whatever unit actually gets checked, and use it mid-period to say whether a business is on course and what the remaining days must average. You will also say what a day below target does and does not tell you, and how a seasonal trade shapes its targets.
Dilla sells soup from a market stall. A cup goes for 6 dollars, and the soup, cup and lid in it cost her 2 dollars 40.
The pitch, the license and the insurance come to 1,080 dollars a month whatever she sells.
A depot has offered to take 200 cups a month at 4 dollars each, collected at closing time.
The pan holds them and the order costs her no market hours.
Her brother says 4 dollars is under what a cup costs once the pitch is counted in, so she should refuse.
March has 24 trading days, and Dilla needs 1,440 dollars of takings in the month to come out even.
Nine days in, the tin holds 460 dollars.
Two of those nine were the wettest days of the year and the market was half empty.
Her market pitch costs 1,080 dollars a month and sold 900 cups in a good month.
A pitch outside the station costs 1,400 a month, and last year's trader there sold about 1,200 cups.
Nobody has counted this year.
You can find break-even and the volume a target profit needs, both by the month, in units and in money. Nobody can act on a month: by the time a monthly figure is known, the month is over. This lesson turns it into a day and a week, and shows how to read a part-finished month against it without either panicking or shrugging.
| Term | What it means |
|---|---|
| Trading days | The days the business is actually open in the period. |
| Daily target | The month's figure divided by the trading days. |
| Running target | The daily target times the trading days gone so far: where the month should be by now. |
| Running average | The total so far divided by the trading days so far. |
| Shortfall | The running target minus what has actually been done. |
| Catch-up rate | What is left of the month's figure divided by the trading days left. |
| Seasonal pattern | A regular rise and fall in sales through the week or the year. |
Read the month so far, and notice that Dilla has to do something about it today, not on the 31st.
One reading says she is behind and should cut the price this week. Another says nine days is nine days, two of them were washed out, and cutting the price now gives away money she will need.
Both of those cost her something if they are wrong. Acting on a bad two weeks that was really weather is how a working price gets thrown away. Waiting for certainty is how a month ends short with nothing left to change.
Work out where nine days should have put her before you read on.
We need 600 lunch boxes a month changes nobody's afternoon. We need 25 a day changes the whole of it, and it is one division:
$$\text{daily target} = \frac{\text{the month's figure}}{\text{trading days in the month}}$$
Trading days, not calendar days. A stall open fifteen days a month that divides by thirty sets itself half the target it needs, and finds out at the end of the month.
It is an average, not a rule. No day owes you the target. What the number is for is the running comparison: eight days in, are you at eight days' worth? If not, there are nineteen days left to do something about it, which is the whole value of the exercise — a monthly figure tells you on the last day, when nothing can be done.
Say it in whatever unit gets checked. Takings per day suit a shop with a register; units per day suit a maker with a bench; hours booked suit a service. The right form is the one somebody will actually look at.
Another way: steps
Another way: table
The same month, four ways, for a kitchen needing 800 boxes at 8 dollars over 24 trading days.
| Period | Boxes | Takings |
|---|---|---|
| Month | 800 | 6400 |
| Week | 200 | 1600 |
| Trading day | 33.3 | 266.67 |
| Lunch hour | about 17 | about 133 |
The last row is the one that changes behavior, because it is the only one somebody can look up at the clock and compare against.
Count the trading days honestly. Take the month, remove the days the business is shut — weekly closing days, public holidays, a planned week off — and count what is left. A market stall may trade 12 days; a shop 26; a cleaner 22.
Divide the month's figure. Break-even, or the volume or takings a target needs, divided by the trading days, gives the daily average the month requires. Choose the unit that will be checked: takings for a register, units for a bench, bookings for a schedule.
Compare as you go. After some days, multiply the daily target by the days gone for the running target, and set the actual total beside it. The difference is the lead or the shortfall.
Recompute the rest of the month. What is left of the month's figure, divided by the trading days left, is the rate the rest of the month now needs. If it is only a little above the original target, the month is still comfortably reachable. If it is far above what a good day produces, the month will fall short, and it is better to know that with two weeks left than on the last day.
Check the arithmetic by adding back: the daily target times the trading days must equal the month's figure, and the done-so-far plus the catch-up rate times the days left must equal it too. Write the check down beside the figures, so anyone reading them later can see they add up.
Every month is lumpy. Weather, school holidays, a local event, a competitor's sale — a few days below target are normal and say nothing. The question is whether the shortfall has a cause that will pass or one that will stay.
Three questions help. What do the low days have in common? Rain, Mondays, the week the road was closed? A shortfall with a passing cause usually corrects itself. Is the gap growing or shrinking? A shortfall that shrinks through the second week is weather; one that widens every week is a trend. Is the catch-up rate reachable? If the remaining days need only a little more than the original average, doing nothing unusual is a sound choice. If it needs more than the best day of the last few months, the month will fall short whatever happens, and the useful work is deciding which bills to move and which costs to hold back, not trying to sell twice as much.
What to avoid is acting on the first bad week with a permanent change — a price cut, a closed day, a dropped line — because a permanent change to answer a temporary dip costs money every month after the dip has gone.
Many businesses have predictable busy and quiet seasons: an ice-cream van, a Christmas market stall, a tax adviser, a garden service. For them a flat daily target is wrong all year — too high in the quiet season, where it produces needless alarm, and too low in the busy one, where it hides a shortfall that the quiet months cannot make up.
The fix is to spread the year's figure by the pattern rather than evenly. If last year's June took a sixth of the year's sales and January a thirtieth, this year's targets for those months follow the same shares. The yearly break-even does not change; only its shape through the year does, and the daily figures are then read against the right month. A business with no past year to go on can use the pattern of similar businesses nearby, and replace it with its own after the first year.
The same idea works inside a week. A café that takes a third of its week on Saturday and Sunday should not expect Monday to carry a seventh of the weekly target. Keep a few weeks of daily takings, work out each weekday's usual share, and set each day's target from its own share. Then a quiet Monday that matches its usual share is on course, and a busy Saturday that falls short of its much larger share is the day worth looking at. Targets shaped this way are a little more work to set up and far more honest to read, because every day is measured against what that kind of day normally does.
A garden center needs 180,000 dollars of takings over the year to break even and make its planned profit. Its sales are strongly seasonal: from past years, April and May together bring 30 percent of the year's takings, while December to February together bring only 9 percent. A flat target of 15,000 a month would be meaningless — easily beaten every spring and impossible every winter.
So the manager spreads the year by the pattern. April's share is 16 percent, or 28,800 dollars; the center is open 26 days in April, so the daily target is about 1,108. Ten days into April the registers show 9,400, against a running target of 11,080: 1,680 behind. Two of those days were frosty and the parking lot was half empty.
The catch-up rate is (28,800 − 9,400) ÷ 16 ≈ 1,213 a day, about 10 percent above the original daily figure. Warm weekends in April often take 2,000, so the manager does not discount — but she does move the bedding plants to the entrance and extends the weekend opening hours by one hour, both of which cost little and can be reversed in May. The daily target turned a vague worry into a specific gap with time left to close it.
Chain stores give each branch a daily sales target built from the same reasoning — the year's plan, spread by the expected pattern of weeks and days — and managers compare each evening's takings with it. What they look for is not a single missed day but a run of them, which is exactly the reading this lesson teaches.
Dividing by calendar days. Thirty days when you trade twenty is a target 33 percent too low, every month.
Treating the average as a floor for every day. A Tuesday below target is normal. Six Tuesdays below target is a pattern, and the pattern is the thing worth acting on.
Closing the quiet days. They carry costs, and they also carry sales. Closing them removes both, and unless the fixed costs actually fall the arithmetic usually goes the wrong way.
A target that never moves. It is built from this period's fixed costs, this price and this variable cost. When any of those changes, so does it — and in a seasonal trade a flat daily target is wrong in both directions all year.
Write the two figures: break-even of 150 crates, and a market that runs 15 days.
$\text{month} = 150; \quad \text{trading days} = 15$
Trading days, not calendar days.
Divide the month by the trading days.
$150 \div 15 = 10$
The daily target in crates.
Compare with dividing by 30.
$150 \div 30 = 5$
Half what she needs: the expensive mistake.
Put it in money at 25 a crate.
$10 \times 25 = 250$
She can check it against the cash box without counting crates.
Check it adds back to the month.
$250 \times 15 = 3750 = 150 \times 25$
The days must add back to the month.
A repair shop needs 75 jobs a month over 25 days. Find the daily target.
$75 \div 25 = 3$
The average the month needs.
After 10 days find the running target.
$3 \times 10 = 30$
Where the month should be by now.
Compare with the 24 jobs done.
$30 - 24 = 6$
Six jobs behind.
Find what is left of the month.
$75 - 24 = 51$
The rest of the month must do this.
Share it over the 15 days left.
$51 \div 15 = 3.4$
The catch-up rate.
Judge whether it is reachable.
$3.4 \text{ vs a usual good day of } 4$
Still possible, and worth knowing now rather than on the 30th.
Write the month: 1440 dollars of takings to come out even over 24 trading days.
$1440 \div 24 = 60$
The daily break-even in takings.
Find where nine days should have put her.
$60 \times 9 = 540$
The running target.
Compare with the 460 in the tin.
$540 - 460 = 80$
Eighty dollars behind.
Estimate what the two washed-out days cost, if each took about half a normal day.
$2 \times 30 = 60$
Most of the shortfall has a cause that has passed.
Find what is left of the month.
$1440 - 460 = 980$
The remaining days must take this.
Share it over the 15 days left.
$980 \div 15 \approx 65.33$
About five dollars a day above the original target.
Decide what to change this week.
$65.33 \text{ is reachable; no price cut}$
A permanent change to answer two wet days would cost money every month after.
Find the daily break-even.
$100 \div 20 = 5$
One division by trading days.
A profit target needs 150 mugs a month. Find the daily target.
$150 \div 20 = 7.5$
The same division on the larger figure.
Find the gap between the two.
Maya's Ceramics breaks even at $100$ mugs a month and is open $20$ days a month. How many mugs a day does it need to average?
Answer:
Complete the worked solution: a business breaks even at $180$ units a month over $20$ trading days. After $12$ trading days it has sold $105$. Where does it stand?
Divide the month by the trading days.
$180 \div 20 =$ t
The daily average the month needs.
Find where the days gone should have put it.
$(\text{daily}) \times 12 =$ e
The running target after this many trading days.
Compare with what was sold.
$(\text{expected}) - 105 =$ s
The shortfall so far.
Find what is left of the month's figure.
$180 - 105 =$ r
What the remaining days must still sell.
Share it over the days that remain.
$(\text{left}) \div 8$
The new daily average is a little above the old one, and there is still time to reach it.
A juice bar breaks even at $260$ cups a month, trades $26$ days a month, and can make at most $17$ cups in a day. For which daily averages is the month worth trading, given it cannot exceed what a day can produce?
This task has no paper form; do it on a device.
Maya's Ceramics needs $150$ mugs a month at $25$ dollars each to clear $600$ dollars of profit, and trades $20$ days. How many dollars does it need to take on an average trading day?
Answer:
Northside Repairs needs $63$ jobs this month over $21$ trading days. After $10$ days it has done $19$. How many jobs a day must it average over the remaining days to reach the month's figure?
Answer:
Bright Home Cleaning breaks even at $30$ standard cleans a month and would need $50$ to clear $600$ dollars of profit. It trades $20$ days a month. Turn both into daily targets.
| Amount | |
|---|---|
| Break-even for the month, standard cleans | 30 |
| Trading days in the month | 20 |
| Break-even a day, standard cleans | |
| Month's target with profit, standard cleans | 50 |
| Target a day, standard cleans |
A barber's shop needs $40$ cuts a week to clear its target, and trades five days. Last week it did $33$ on Monday to Thursday combined and $7$ on Friday alone, hitting $40$ exactly. The owner concludes the shop should open Fridays only. What is wrong with that?
Lesson test: one question per skill, one attempt each, no hints. Your answers are checked when you submit.
Northside Repairs breaks even at $50$ screen replacements a month and would need $75$ to clear $800$ dollars of profit. It trades $25$ days a month. Turn both into daily targets.
| Amount | |
|---|---|
| Break-even for the month, screen replacements | 50 |
| Trading days in the month | 25 |
| Break-even a day, screen replacements | |
| Month's target with profit, screen replacements | 75 |
| Target a day, screen replacements |
You can turn a month's figure into a daily target, read a part-finished month against it, and find the catch-up rate. Tell someone why dividing by thirty when you trade fifteen days is a mistake you only discover at month end. Next: the price that has to be cleared before any of this works, and the assumptions it rests on.
16. Your turn: 100 mugs a month, 20 trading days, step 3
$7.5 - 5 = 2.5$
The profit target stated as work: two and a half mugs a day.