Break Even, Part I: The Cup Theory of Profitability

There are two ways to generate profit: You can simply go from day to day and hope it happens, or you can identify the primary "drivers" of profitability—and manage them. Sadly, far too many jewelers opt for the "jump and hope" approach, even though the managed approach offers so many advantages. In the last few articles, we've talked about financial statements and ratio analysis as one way to get your arms around the management of your business. But in the financial time continuum of your business, financial statements represent past history. We can't change yesterday; we can only learn from it. We can have an impact only on today and tomorrow. For the next couple of articles, we'd like to share an analysis tool called "break even" that can help you make significantly better decisions for the future. Now, you're probably expecting some technical financial mumbo-jumbo, right? Not so

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