Vol. 7, Issue 11, Part A (2021)

Abstract
Young and dynamic entrepreneurs are very much interested in starting up new ventures with new innovative ideas. These new ideas require funding. Every entrepreneur, be it a venture capitalist or a financier, is interested in knowing when a startup will start generating the profits or when there will be a break-even for assessing the viability of the project. Being dynamic in nature, they are interested in knowing when they will get back the funds (fixed cost) invested in the project as soon as possible, so that funds can be spared for another new innovative ideas. It is here the role of break-even analysis comes into existence. Break-even analysis is a management tool to study cost-volume-profit relationship. It is concerned with determining that level of activity where total revenue/sales is equal to total cost in narrower sense. However, its wider interpretation may refer to techniques which determines profit at any level of activity. BEP generates the information that is useful in decision making and profit planning. If sales are not equal to total cost, it cautions management to find cause and take appropriate actions to reduce fixed cost or variable cost. The objective of writing this paper is to develop the understanding how to calculate the different types of Break-even points in different business models and how they are useful in decision making, planning and control. Cases-based on real life situation have been used to explain different types of BEP. The paper will be useful to start-up business and their management in decision making.