From the numbers to the change
- Your numbers sayLosses in most months for eight quarters, funded by loans or promoter money
- The cause underneathA cost base set for volumes that never came, or a margin that cannot cover it
- What changesDecide: fix it, shrink it or close part of it, on the numbers
- What to expectBreak-even reached, or a clear decision not to keep funding losses
An illustration of how the thinking runs, not a client result.
The numbers to open first
Work from 24 monthly P&Ls and a list of fixed costs. The break-even is the anchor.
| Number | How to get it | What worries us |
|---|---|---|
| Contribution margin | (Sales - variable costs) / sales | Too low to carry the fixed cost at any realistic volume |
| Break-even sales | Fixed costs / contribution margin | Far above any sales level achieved in the last two years |
| Loss per month, and what funds it | Operating loss, and the loans or promoter funds that cover it | The funding source is running out |
| Cash runway | Cash and headroom / monthly burn | Under 6 months |
Likely causes, and how the numbers test each
| Possible cause | What you would see in the numbers |
|---|---|
| Fixed costs sized for a higher volume | Break-even far above actual sales; overheads steady while sales fell |
| Contribution too thin | Gross margin too low to pay fixed costs even at higher volume |
| One part of the business loses and hides in the whole | Segment P&L shows profit in some units and loss in others |
| Interest on borrowing used for losses | Interest cover below one; debt growing |
What to change, in order of effect
Compute break-even honestly
with the break-even calculator, using real fixed costs.
Segment the P&L by product, customer or location
to see where the loss really sits.
Decide for each segment:
repair, shrink or exit. Keep what contributes; stop funding what does not.
Resize the fixed cost
to the volume you can reliably reach.
Set a funding limit
for the repair plan, with a date to review. Do not fund open-endedly.
Business under pressure? Let a CFO read your numbers.
A senior CFO reads them with you and tells you what is really going on. No cost, no obligation.
When it may be too late
There is a point at which the cash left is smaller than the time the fix needs. Our page Is it too late to turn my business around? helps you see where you stand.
What to expect, and when
A loss-making business that is repaired usually shows the first improvement in the monthly loss within two to three months. The test at day 90 is whether the monthly loss is clearly shrinking towards break-even. If it is not, the decision to shrink or stop should be taken on the numbers, not on hope.
Mistakes that make it worse
- Adding sales without raising contribution.
- Funding losses with expensive short-term debt.
- Cutting the people who produce revenue before the people who do not.
- Waiting for the market to return.
Go deeper
CFOAvatar complements every turnaround
A human CFO sees your business at the review. Problems do not wait for the meeting. CFOAvatar is connected to your accounting data and checks your numbers every day, so the scoreboard in a turnaround is always current. Ask it what an owner in trouble would ask:
What owners say after the numbers started talking
Before CFOSurge came into the picture, our business lacked financial discipline. Once their team started overseeing our finances, everything fell into place. There was accountability and when you know someone is keeping track, you ensure things get done properly. It’s been three years and the systems they put in place are still working well. Our business is in a much better position today.
They have facilitated us in putting both process and financial systems in place as well as take some very difficult but required decisions. We are indeed pleased to record our appreciation of their individualized, friendly and timely support in our activities during the course of their association.
We now prepare monthly business plans that clearly show revenue, costs, and final profit. This has helped us plan better and avoid last-minute surprises.
Quoted word for word from our clients. Read more client words →
Questions owners ask us
My business has lost money two years running. Can it be saved?
Often yes, if the cause is found and fixable, such as thin contribution or an oversized cost base. The numbers show which, and how long the cash will last.
Should I put more money in?
Not before you know where the money is going. Put in funds against a plan with a defined result and review date.
How do I know if I should close part of the business?
Segment the P&L. A part with negative contribution that cannot be repaired is a candidate to shrink or close.