Turning a new venture into a profitable business is part math, part discipline. How long it takes to reach the break-even point varies, but many small businesses reach it within six – 18 months.
Want to forecast when your business will start turning a profit? Read on for five milestones to help you reach profitability this year.
- Know your break-even month by projecting fixed and variable costs, sales volume, and when net cash turns positive.
- Keep CAC low and LTV high so customer acquisition costs are covered by long-term gross profit.
- Automate routine tasks and set a 3–6 month emergency fund while tracking progress weekly to sustain profitability.
1. You know when your break-even month is
The break-even point is when your total revenue covers fixed and variable costs, so you’re no longer operating at a loss. Knowing this date lets you focus tactics on that target and align the team’s priorities around time to profit.
Here’s how to project your first profitable month:
- List average monthly fixed costs (rent, salaries), variable costs, and realistic monthly sales volume
- Estimate gross margin by product/service
- Project future financial performance
- Identify the month when net cash turns positive
Overwhelmed? There are several tools you can (and should) use to help, including:
- Profit and loss statement and cash flow statement. Your accounting software should have these reports available, if applicable.
- A break-even calculator and real-time dashboards
- Goal tracking so you and other leaders can adjust pricing, discounts, or expense pacing
2. Your CAC is low and your LTV high
Attainable and sustainable profitability is only possible if the cost of acquiring customers is lower than how much they spend over the course of being a customer.
Validate the following metrics early:
- Customer acquisition cost (CAC): Total sales and marketing cost to acquire one customer.
- Lifetime value (LTV): Total gross profit you expect from a customer over the relationship.
- Gross margin: Revenue minus direct costs, as a percentage of revenue.
3. You have automation in place
Automation is software handling routine tasks (such as invoicing and running payroll) without manual input. It frees time for value-creating work and reduces error and labor costs.
Automation opportunities include:
- Accounting: Invoicing, categorization, and account reconciliation
- Payroll: Tax calculations, W-2 filing
- Subscriptions: Automated billing cycles
- Time-tracking: Seamless integration with payroll
4. Your emergency fund is set up
An emergency fund is a cash reserve that should cover at least three – six months of expenses.
Knowing how to build an emergency fund is a key part of ensuring financial stability and reducing debt dependence.
You can calculate and build your three-month cash reserve by:
- Averaging the past six – 12 months of operating expenses
- Multiplying by three months (that’s your target reserve)
- Transferring revenue each month into a separate savings account
- Reviewing your accumulated savings monthly and adjusting contributions as needed
5. You’re actively tracking your progress
Regularly (weekly or biweekly) monitoring key business and project checkpoints can help you reach profitability faster.
For example, here’s a simple weekly cadence you can use:
- Monday: Review goals, measures, and at-risk milestones (15–30 minutes)
- Midweek: Owner check-ins to unblock projects.
- Friday: Update statuses and reset priorities.
Profitability FAQs
Most small businesses target break-even within six – 18 months, but timelines vary by costs, demand, and cash flow planning.
Automation streamlines repetitive work, reduces manual errors, and lowers labor costs so teams can redirect time to higher-value activities.
Strong cash flow management ensures you can cover expenses, avoid costly borrowing, and lay the foundation needed to reach and maintain profitability.
Customer acquisition cost (CAC) indicates whether sales and marketing spend generates enough value. Paired with lifetime value (LTV), CAC shows if growth is scalable and sustainable.
