Bill BrownFounder of ServiceTitan Hacks community (9k+ pros) | INC 5000 Contractor | Helping contractors win with AI & Automation

Proven Way To Calculate True Breakeven

27 Aug 2025

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Speaker explains that the cash flow statement reveals a company's true break-even point because certain outflows (loan principal payments and owner distributions) do not appear as expenses on the profit and loss statement. Using an example of $15,000 per month in principal payments for a fleet of vehicles, the speaker notes the break-even is effectively shifted upward by that amount — the company must generate sufficient net income on the P&L to cover cash outflows recorded on the cash flow statement.

Well, I was going to say the cash flow statement will give you to a certain extent what your real break even point is because break even point is not always going to be $0. If you are a company that has a lot of vehicles on loan, you're taking a lot of distributions out of the company. All of the principal payments and the distributions from the company do not show up as an expense in the P and L. So let's say that you've got a whole fleet of vehicles that are on loan and each month it's $15,000 of principal payments that you're making each month. Your break point is now not zero, it's 15,000 because you have to make sure that you're generating enough net income on the P and L to cover what you know is going to be coming out of the bank account in the form of principal payments on loans and those that's usually the connection that is missed until you really start understanding what that statement is. You start seeing it every month.