Advantages and Disadvantages of BE for start up bussiness

Question 1

Advantages of the BE analysis:

Answer 1

focuses on how long it will take before a start-up reaches profitability.
helps entrepreneur & finance.
margin of safety shows how much a sales forecast can prove over-optimistic before losses are incurred.
illustrates the importance of keeping fixed costs down to a minimum.
calculations are quick and easy.

Question 2

Disadvantages of the BE analysis:

Answer 2

Unrealistic assumptions
sales are unlikely to be the same as output
variable costs do not always stay the same.
most businesses sell more than one product
a planning aid rather than a decision-making tool