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An “Attitude Indicator”, or “Artificial Horizon” is one of six key instruments a pilot relies on to fly a plane. This instrument informs the pilot of the plane’s orientation relative to the horizon. In simple terms, it tells the pilot, at a glance, if the plane is climbing, flying level, or descending. This is important information if you are flying a plane!

So, what about your business then? Is it equipped with an “Attitude Indicator”? Can you, at a quick glance, see if your business is climbing, flying level, or in descent….in other words making money, breaking even, or losing money? Sure, a Profit & Loss Statement will tell you but unless you have very sophisticated accounting systems, the best you could hope for is a reading once a month. Would you fly in a plane with instruments that only updated their reading once a month?!

Here’s a solution. It’s called a Break-even Horizon. Most of us are familiar with the term break-even point. It is the level of sales your business needs to generate to cover your fixed and variable costs plus the level of profit sufficient to cover your debt commitments. By calculating this amount and dividing it down to daily and weekly benchmarks you can establish your daily and weekly sales horizons. By comparing your actual sales results for the day and week against your daily and weekly sales horizon you can, at glance, know if your business is climbing, flying level, or in descent.

You still need hard measures like your monthly P & L, and Balance Sheet to assess the overall financial performance of your business. But just like flying a plane, your “Break-even Horizon” lets you know as soon as you are in descent, so you can take corrective action before it’s too late.