Create your own creative space, then make money!

Introduction

In recent years, there has been an increase of attention in the creative industries, so the creative entrepreneurship issue also has been interested. What is creative entrepreneurship by the way? In my view, creative entrepreneurs are investors like businessmen but what they differently invest are ideas and talents. What else make creative entrepreneur differ from typical business is focusing on creation and operation of creative or intellectual capital. These days many courses related to creative entrepreneurship are becoming broadly offered, and seem trendy since it has developed as an academic discipline. And this might be the reason why I’m now here, in London, to learn how to set myself up as self-employed in order to start my own business within the creative industry in the near future.

Design Thinking and Entrepreneurship is one of modules I’ve been studying at Kingston University, MA Creative Economy course. I’ve learned how to run my own business both in class and through real practicing experience with the team, FlowScarf. Now it is almost the end of the course and I would like to share my experience, which it is absolutely useful for my future goal, via this article. It can be said that starting a creative entrepreneur seems to be creating a new creative zone, make fun, make friends, and of course make money. What I’ve also found is it’s not what you extremely expert in a thing, but its kind of mixture of skills that you need courage to spend time and effort for it. The details will be described in the following parts.

Get cool ideas with friends

I’m pretty sure that many people have ideas to create something or want something to be created, but they never start. Actually, people should do just write it down or speak it out and build a prototype. Simply begin with drawing or mine mapping is so influential, image of ideas show the possibility of work. Start simply and develop the idea to create prototype, since we get a real prototype, we can decide this idea should be continued or not. The cheapest approach is to do the prototype yourself, and who know, it may be the best. One example is Claus Sadlier who made a triple-wall-insulated paper cup prototype from less than $1 on the materials. Existing paper cups, poster board, cardboard, glue and scissors from kitchen were used to create, then added value to his product. Now his company Vernalis and Insulair Inc. generates approximately $50 million in annual sales. (StartupNation, 2012)

Additionally, it would be more than good if we give ourselves to do something we do well. From my experience, the best feeling is to be proud of something I’ve done differently from others and it’s good. It must be good thing, which can be done simply because it is something we are craving to do with life and we don’t need to try to be others. However, it doesn’t mean you should keep yourself only in your private space, collaboration is also amazingly powerful. According to a Thai art director and production designer, Kitisak Tiewtrakul (2012) who owns the website http://www.kemkitisak.com/Kem/Home.html, he states that his ideas always come when he talks to somebody about his thoughts and the task always became bigger and better. Another suggestion by Jake Nickell (2011) who is the founder of Threadless.com is just making things with friends. What he did is got into weird, experimental javascript battles with his co-founder on as artsy-fartsy forum on the Internet to figured out how to make the whole browser window move with some code. Then they started Threadless!

Because people have different aptitudes, some good in design, management, accounting or selling skills, sharing these talents is to create opportunities for better things happen.

Added value

Since we prefer to work with something we are happy to do, minds and feeling will automatically work as a team to support us achieves our objective. Nevertheless, many times that product or service we would like to do for a business is too simple and has high competitors, adding value therefore becomes crucial in term of entrepreneurship. We can call in another word ‘branding’, which is described as a service or product that clients experience to have individual benefits beyond price and functional performance or a symbol serving to characterize your company from others. (Ahonen, 2008) Strong brands refer the sensation of familiarity and trust, low risk, and serve as the root for communication and commitment between individuals on one hand, customers and companies on the other. It can be in form of physical organization identity such as trademark, logo, display, style etc. and the history or storytelling of the company, which can depict business’s reputation.

Next step is carrying the value with you every time everywhere and distribute frequently through networking. According to Jeffrey H. Dyer, Hal B. Gregersen, and Clayton M. Christensen (2009), networking is one of innovator’s five discovery; associating, questioning, observing, experimenting, and networking. Apart from using network to sell company, to access resources or to boost careers, variety perspective that you can get from spending time and energy to sharing ideas via a network of diverse individuals is valuable. Conferences or festivals which combine together entrepreneurs, artists, politicians, academics, scientists, and thinkers from any part of the world, who come to spread new ideas, and projects such as Technology, Entertainment, and Design (TED), Davos, and the Aspen Ideas Festival are useful in order to extend our knowledge domains.

One example of my best friend’s tiny business in Bangkok, Praewa Chirapravati Na Ayuthaya (2012), she graduated from faculty of fine and applied arts, Chulalongkorn University majoring Fashion Design. Her hobby is to do glitter tattoo for herself and friends, take a picture, and frequently post it on Instagram and Facebook. As technology is so empowering for people who create things especially the Internet, many young girls in Bangkok see and react quickly to what she’s made. Now she has invited to join many festivals to do her glitter tattoo for people who go to those festivals. Now we can visit her Facebook page on this link http://www.facebook.com/wibwabwub

In this case, technology also support directly in Public Relation. It provides more channels of distribution than ever in the past, which benefits to third party endorsement. Instead of spending big money for advertising, PR strategy is one of ‘must do’ strategies in order to cover large group of people.

Be safe

Another important issue that makes entrepreneurs differ from artists and other creative people is they also concern about money. Therefore, crucial foundations of business including marketing and financing cannot be avoided, as they are parts of serious business.

Since marketing causes the strategy that motivates business communication, sales techniques and business developments, it is the method by which businesses design value for clients and make strong customer relationships. Marketing should cover clarity, consistency, competitiveness and credibility of business, which it influences entrepreneur to have crystal clear with segmenting, targeting and positioning. Especially doing market research to know your customer, Who are they? What they exactly want? What’s the trend of industry? Who are competitors? in order to deliver efficient service or product with appropriate pricing. According to Shaun Powell and Sean Ennis (2007), in order to survive, it is obvious that small sized businesses should operate as 
price takers rather than price setters for their offered services.

Considering about this kind of thing reminds me about another small business in my university in Bangkok. ‘Uncle Fruity’ is a name of a friendly middle age guy who sale ready to eat fruits by his green Vespa around each faculty of Chulalongkorn University. The strength of Uncle Fruity’s business is his fruits are packed purely and cold without ‘seed’. Imagine, cold tasty watermelon without seeds, how cool is that!  It meets the need of his customer very well, as Thailand is a very hot country. He has crystal clear with target market and he knows what they exactly want. Moreover, his strategy of access to customer by his Vespa works very well since students don’t need to go anywhere. This might not be a good example for anyone who doesn’t know ‘Uncle Fruity’, but for all Chulalongkorn students, no one doesn’t know him. However, his business was finally able to support his children graduated from well-known University in Bangkok. In my opinion, ‘Uncle Fruity’ is still the legend.

Last but not least, according to my studying background in arts, thinking about mathematic has seemed so far from my ordinary life. But after I’ve tried to understand basic resources of finance for small business, my though has been changed. No matter what am I doing, I cannot refuse them anyway. Financial statements including balance sheet, profit and lost and cash flow allow entrepreneur to know accurately what they spend and earn in order to make a forecast of business. As same as a concept of break-even analysis which is that we try to determine a level of sales where revenue equals to costs or in another point of view it means profit is zero also. It is very useful once we would like to know where the safety point for running the business or new investment. (Richards, 2012) However, it is still difficult for me to clearly understand financial part of business, therefore, in the future of my serious business, I should have some one who experts with this issue in my company and I learn just to understand in order to avoid the cheating.

 

Reach the goal

In conclusion, in creative industry, design thinking becomes an important ingredient in entrepreneurship. Modern entrepreneurs should be ready to go out of comfort zone (https://kjit.wordpress.com/2012/05/16/out-from-comfort-zone-make-things-with-friends/) and build their own creative space, spend effort as much as spend passion and also concern about business management. In this case, I didn’t mention space as only physical space, but creative zone in my opinion is when entrepreneur build yourself up as a new business in the industry. Not exactly new business but it can be new just for some parts of business such as new target market (see Blue Ocean Strategy of Kim , and Mauborgne, 2004), new business model, new distribution, new marketing strategy etc. In other word, it’s not only to design new product, but also innovative process can be designed.  Furthermore, what I’ve learned from Design Thinking and Entrepreneurship class is to allow myself up-to-date through technology especially social media; Twitter, Facebook, Instagram, WordPress to gain benefit from networking and to keep the business into the trend.

Finally, I believe that all I’ve learned from class and from examples I’ve written about both in this article and every post in my blog will absolutely helpful to reach my goal in the near future. On one hand, my current small business of cloth shop ‘KJIT’ (http://www.facebook.com/kjitkjit) would be improved in corporate identity and financial part after I go back to my country, another is my new business, which it might be happened in the future. Nevertheless, there were many activities that first I felt unhappy to do for this class, it just because I have never done before, but when I can pass them, I realized that this is what good entrepreneur should face. Be professional in one aspect is not enough, creative entrepreneur should be actively to familiar with mixed skills that I already described on above.

References

Ahonen, M. 2008, ‘Branding – does it even exist among SMEs?’, Proceedings of the 16th Nordic Conference on Small Business Research, May 21st -23rd 2008, Tallinn, Estonia.

Chirapravati, P. 2012, http://www.facebook.com/wibwabwub, 18/05/2012.

Ennis, S. and Powell, S. (2007), ’Organisational marketing in the creative industries’, Qualitative Market Research: An International Journal, Vol. 10 Iss: 4 pp. 375 – 389.

Kim, W. and Mauborgne, R. 2004, ‘Blue Ocean Strategy’, Harvard Business Reviewhttp://hbr.org/2004/10/blue-ocean-strategy/ar/1, 18/05/2012.

Nickell, J. 2011, ‘Never Stop Making’, news,

http://www.threadless.com/news/757809/Never_Stop_Making, 18/05/2012.

Richards, D. 2012, ‘How to Do a Breakeven Analysis’, Entrepreneur,

http://entrepreneurs.about.com/od/businessplan/a/breakeven.htm, 19/05/2012.

StartupNation, 2012, ‘Getting an Invention Prototype Built’, Inventing,  http://www.startupnation.com/business-articles/1362/1/build-invention-prototype.asp, 18/05/2012.

Tiewtrakul, K. 2012, http://www.kemkitisak.com/Kem/Home.html, 10/05/2012.

https://kjit.wordpress.com/2012/05/16/out-from-comfort-zone-make-things-with-friends/, 19/05/2012.

http://www.facebook.com/kjitkjit, 19/05/2012.

Photo:

http://www.dek-d.com/board/view.php?id=1338567, 19/05/2012.

http://www.facebook.com/wibwabwub, 19/05/2012.

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‘out from comfort zone’ & ‘make things with friends’

Creativity in a general meaning refers to an ability to create new things or new ideas. It can be collected from anything surrounded us. Since I have a chance to know a website www.threadless.com, I have been amazed how can the owner get a passion to create new things and become considerably success. I found the answer after I saw a talk show of Jake Nickell (TED talk), one of the owners of Threadless company on Youtube. It was such an interesting knowledge and I hope it will be useful to share his belief to those who are seeking for a new inspiration.

Jake is a fearless entrepreneur leader. He has a strongly passion for learning new things which make him different from other businessmen. Jake said he found his inspiration for Threadless from an uncomfortable zone. It was a zone of insecurity as we will never know what it has inside. However, the new environment and pressure are always leaded us to a creativity and innovation. He finally got an idea to make his business outstand from its competitors by bringing people together to share their design of T-shirt. The company earns a lot of advantages from this strategy since it is not only makes profit from others idea but it also attracts its target attention as well as receiving the brand awareness. Jake also believes that thinking outside the box will bring a better outcome. That is why he have been tried to encourage his workers to generate their ideas apart from the business side.

In order to expand his business to worldwide market, Jake believes in a word ‘Make things with friends’. It is the idea extension. Thus, he has arranged many events for Threadless to open a chance for young designers to share their experiences. Ideas from others will help us improve their own weakness. Definitely, it also leads to a better creative innovation. 

The legend of ‘Gee Choi’

Hi,

Since I have been studying about marketing as one of my business modules. It reminds me about one famous shop that everybody knows when I was a bachelor student in Thailand. Even it is a very small  local shop, its style of marketing is very unique.

A tiny store just off of Phayathai Road in central Bangkok, Thailand, has become very well known for its selling technique and unique store concept.  For more than half a century, Gee Choi has done business mainly with students from Chulalongkorn University and local residents. This mom-and-pop store is owned by a lady of Chinese descent named Gee Choi. Her motto is that the shop can provide anything and everything a customer is looking for.  Buyers are not allowed in this 3-meter-by-10-meter shop, but if they were, there would be no room to even move their arms.  The stop is so packed with merchandize that only employees and Gee Choi herself know where everything is located.

 

 

To prove whether it was true that Gee Choi could sell everything a customer is looking for, a joke was played asking her whether she had a Mercedes-Benz. Gee Choi went to the back of the shop and grabbed the latest Mercedes catalogue and asked which one the customer preferred.  Some students even order food here, just because they know that Gee Choi can provide them with anything.  Even though Gee Choi doesn’t have a kitchen to cook, she has helpers to run out and buy orders from the nearby Samyan Market.  Gee Choi has definitely proven to have a high level of service mind.

 

The prices set at Gee Choi can differ from many other stores.  It is up to Gee Choi’s mood on a particular day how much she will charge.  Sometimes is may be cheaper and some days it may be more expensive.  Her question to customers is “How much do you usually buy it for?” Even though this small shop has an unusual business concept, students and locals are attached to her and her shop has great stature in their minds.

 

In the past, Gee Choi used to be opened 24 hours and most people wondered when she slept since she was always sitting in front of the shop.  The answer behind this question is that Gee Choi had a twin.  The only way to tell the two sisters apart was by looking at their teeth.  One sister had a golden tooth.  However, in recent years, Gee Choi’s sister passed away, leaving her to run the shop with help from her children.

Source for picture: http://news.nipa.co.th/news.action?newsid=128574

 

Hello Summer!

While my friends in Bangkok always complain about extremely hot weather in Bangkok, me on the other hand, always wait for the sunny day of London.

Since there are lots of things I need to deal with these days; reading, reading, reading, writing, writing, writing, working, working and working!

Weather effects strongly to my emotion. I can easily depress by bad climate.

 

However, it’s really glad to feel warmer and warmer these two or three days when I went out. Summer is coming.

 

One thing that many girls wont miss to do is to check their cloths and find new item for coming season. For me, I already have one thing special for this summer which is a summer hoodie-scarf by Flow. Since summer in London is totally different from Bangkok, it still windy. I believe that this hoodie-scarf which made by thin fabric and suit with the weather here, will absolutely fulfill my summer in London.

 

If anyone want to have one, please feel free to contact FlowScarf

http://www.facebook.com/Flowscarf

A great accidentally business

Once upon the time, there was a girl living in a capital city of Thailand. She was studying in the last year of university. She loves dressing up, however, her shape is very very skinny and short. Some nice stylish cloths cannot be fit with her in several times and some fitted cloths she doesn’t really want to wear it. Therefore, she designed her own cloths which she really want to wear, walking around ‘Pahurad’ almost every weekend for choosing fabric by herself and send it to the tailor to produce her outfits.

The story is started from now, since many of her friends like her cloths and ask her to produce for them by ordering one-by-one and pay her for the cost of production. Absolutely she loves to do that! From her friends expand to friends of friends expand to friends of friends of friends, then the difficulty of communication started to be a problem. She has to create her page on Facebook and create her brand name ‘KJIT’ to make everything goes easier. Customers can order their own cloths by make-to-order method and they can choose color they want from many many shade. The style and perfect cutting impress most of Asian girls. From 1 style to 3 to 10, from 7 customers to a hundred by ‘ACCIDENTALLY’ now KJIT has its own royalty mostly supported by Thai young celebrities.

       

         

To be honest, she has never imagined herself to be a designer or an owner of a cloth shop, but now her hobby from passionate became a small business which provides some money 🙂 . Even it’s not a big money, she doesn’t have much time and skills of doing business, her brand is still her brand, it’s not just a dream. Her products are produced and the customer are real, it is the real responsibility to concern the customers’ style. It’s not just about money, but it’s her happiness to see nice people in her outfits, it’s about the trust that she got from from her customers.

         

      

I wouldn’t want to say who this girl is, by the way, if you have time please feel free to see her page http://www.facebook.com/kjitkjit . Even though, it hasn’t been updated for a while, but just go to say hi and give her a little cheer. I believe that she would love to hear from u for her future plan of development her own business.

As I define this shop as an accidentally business, one thing i’ve found is if she was not skinny and if she wasn’t start to ‘create’ things, this business was not going to be happened. Many girls may have beautiful cloth sketching in their mind, but if it’s not made, it will just be in mind.

Now I realize that creativity is not just about to think but it includes ‘to make’, to make it happens.

Today What I ate

The trend of the social networking, lots of people are updating their movement via pictures feelings and forward entertainments to others including favorite stories to indicate the identity in the world of social network.

An activity that people who like to eat like to do is to review yummy foods that they have tried from many places through the Blog, Facebook, Twitter, etc. For some people, although they are not an expert in food reviewing, but just shoot their own foods before eating can provide happiness. To show “What I ate for today” for breakfast, lunch, dinner is enough to anyone who knows me. This behavior is becoming increasingly popular with creating seriously fan pages such as facebook.com/snap.before.eat in Thailand.

According to the research of “360i” sited in Mashable.com about the behavior of people in this era. This habit could be considered addictive, to take food before eating. The sample group of research is American who love to take pictures before eat. The data from the study indicate that the main reason that caused the trend is to tell that What I ate for today or to show foods that they made by themselves. Or including special memorable occasions, beauty of food, the colors, time spending with someone special, talking about the restaurant, telling secret recipe or showing some food that may have never seen before.

The popular dish which be taken the most is steak followed by variety of desserts and cakes. The 360i also stated that during 2010 the number of various type of foods more than 80 billion images from around the world have been uploaded through multifunctional social network by more than 52% of the pictures uploaded from smart phone and the other 19% were taking pictures and uploaded via various interfaces Facebook, Twitter, Picasa, Flickr and others. In Africa, it has the label of “I Ate This” which more than 23,000 people have attended. These high number show that the trend of shooting food before eating is highly popular and continue growing largely.

It seems to be annoying for some people when too many photo of food are shown in your Facebook feeds or Instagram, but sometimes it educated u to know the creativity of foods in this era and it helped you to find good places to go out with friends easier than ever before.

Now, I would not deny that eating is really a big deal.

 

Let’s find a safety Point

According to my studying background in Faculty of Art majoring in Thai Traditional Music, talking about business model has seemed so far from my ordinary everyday life, and at that time it made me think about only very huge companies, for example: Apple, BMW or else. But after taking Financial Resource Management course my though has been changed, the concepts I studied would be in all kinds and all sizes of business. No matter what are you doing, you cannot refuse them anyway. Due to my studying coursework and individual assessment, I would like to share some knowledge from FRM class.

Shall we begin with a concept of break-even analysis. Break-even analysis is that we try to determine a level of sales where revenue equals to costs or in another point of view it means profit is zero also. So how is it worth for doing business? Yes, of course. To make it easy to more understand I will imagine myself as a coffee shop owner. Once I open my little shop, it would help me figure out how many a cup of coffee and a piece of sandwich I have to sell to my customers to cover all costs that occurs. For in-depth detail, I would like to tell you via the following equations:

Before I start to talk about the equation, I would like to define each item that conglomerates in it. First, a variable cost is a cost that varies in direct proportion to change in the level of activity. The activity can be expressed in many ways, such as units produced, units sold, miles driven, beds occupied, lines of print, hours worked, and so forth (GARRISON, 2006, p.48-49). The variable costs for the coffee shop would be coffee beans, take-away cups and glasses, ingredients of desserts and sandwiches. Second, a fixed cost is a cost that remains constant regardless of change in the level of activity. Consequently, as the activity level rises and falls, total fixed costs remain constant unless influenced by some outside force such as a price change (GARRISON, 2006, p.49-50). For our shop, the fixed costs would be rental expense, salary expense, depreciation expense and advertising expense.

The above equation shows a relationship of break-even point among total fixed costs, selling price per unit and variable costs per unit. It tells us that the break-even point will be large number (or difficult for the owner to reach the break-even point), if total fixed costs and variable costs are high whereas selling price is low. In contrast, the break-even point will be small number (or easy for the owner to reach the break-even point), if total fixed costs and variable costs are low whereas selling price is high.

Break-even Point

Total Fixed Costs

Variable Cost per unit

Selling price per unit

Easy to reach

Low

Low

High

Difficult to reach

High

High

Low

Table 1: Relationship of break-even point among total fixed costs, selling price per unit and variable costs per unit

Therefore, for more practical I will show you two-different cases which I assume to sell only a medium size of hot Latte.

Assumption 1: selling price is £2 per cup, variable costs are £0.50 and total fixed costs are £25,000.

Where:

Hot Latte (cups)

Sales (£)

Variable Costs (£)

Total Fixed Costs (£)

Total Costs

0

0

0

25,000

25,000

1,000

2,000

500

25,000

25,500

2,000

4,000

1,000

25,000

26,000

3,000

6,000

1,500

25,000

26,500

4,000

8,000

2,000

25,000

27,000

5,000

10,000

2,500

25,000

27,500

6,000

12,000

3,000

25,000

28,000

7,000

14,000

3,500

25,000

28,500

8,000

16,000

4,000

25,000

29,000

9,000

18,000

4,500

25,000

29,500

10,000

20,000

5,000

25,000

30,000

11,000

22,000

5,500

25,000

30,500

12,000

24,000

6,000

25,000

31,000

13,000

26,000

6,500

25,000

31,500

14,000

28,000

7,000

25,000

32,000

15,000

30,000

7,500

25,000

32,500

16,000

32,000

8,000

25,000

33,000

17,000

34,000

8,500

25,000

33,500

18,000

36,000

9,000

25,000

34,000

19,000

38,000

9,500

25,000

34,500

20,000

40,000

10,000

25,000

35,000

21,000

42,000

10,500

25,000

35,500

22,000

44,000

11,000

25,000

36,000

23,000

46,000

11,500

25,000

36,500

24,000

48,000

12,000

25,000

37,000

25,000

50,000

12,500

25,000

37,500

26,000

52,000

13,000

25,000

38,000

27,000

54,000

13,500

25,000

38,500

28,000

56,000

14,000

25,000

39,000

29,000

58,000

14,500

25,000

39,500

30,000

60,000

15,000

25,000

40,000

31,000

62,000

15,500

25,000

40,500

32,000

64,000

16,000

25,000

41,000

33,000

66,000

16,500

25,000

41,500

34,000

68,000

17,000

25,000

42,000

35,000

70,000

17,500

25,000

42,500

36,000

72,000

18,000

25,000

43,000

37,000

74,000

18,500

25,000

43,500

38,000

76,000

19,000

25,000

44,000

39,000

78,000

19,500

25,000

44,500

40,000

80,000

20,000

25,000

45,000

Table 2: Calculation of sales, variable costs, total fixed costs and total costs for the assumption 1

Graph 1: Relationship of sales, variable costs, total fixed costs and total costs for the assumption 1

So the break-even point would be 16,700 cups of hot Latte approximately.

Assumption 2: selling price is £2 per cup, variable costs are £0.70 and total fixed costs are £27,000.

Where:

Hot Latte (cups)

Sales (£)

Variable Costs (£)

Total Fixed Costs (£)

Total Costs

0

0

0

27,000

27,000

1,000

2,000

700

27,000

27,700

2,000

4,000

1,400

27,000

28,400

3,000

6,000

2,100

27,000

29,100

4,000

8,000

2,800

27,000

29,800

5,000

10,000

3,500

27,000

30,500

6,000

12,000

4,200

27,000

31,200

7,000

14,000

4,900

27,000

31,900

8,000

16,000

5,600

27,000

32,600

9,000

18,000

6,300

27,000

33,300

10,000

20,000

7,000

27,000

34,000

11,000

22,000

7,700

27,000

34,700

12,000

24,000

8,400

27,000

35,400

13,000

26,000

9,100

27,000

36,100

14,000

28,000

9,800

27,000

36,800

15,000

30,000

10,500

27,000

37,500

16,000

32,000

11,200

27,000

38,200

17,000

34,000

11,900

27,000

38,900

18,000

36,000

12,600

27,000

39,600

19,000

38,000

13,300

27,000

40,300

20,000

40,000

14,000

27,000

41,000

21,000

42,000

14,700

27,000

41,700

22,000

44,000

15,400

27,000

42,400

23,000

46,000

16,100

27,000

43,100

24,000

48,000

16,800

27,000

43,800

25,000

50,000

17,500

27,000

44,500

26,000

52,000

18,200

27,000

45,200

27,000

54,000

18,900

27,000

45,900

28,000

56,000

19,600

27,000

46,600

29,000

58,000

20,300

27,000

47,300

30,000

60,000

21,000

27,000

48,000

31,000

62,000

21,700

27,000

48,700

32,000

64,000

22,400

27,000

49,400

33,000

66,000

23,100

27,000

50,100

34,000

68,000

23,800

27,000

50,800

35,000

70,000

24,500

27,000

51,500

36,000

72,000

25,200

27,000

52,200

37,000

74,000

25,900

27,000

52,900

38,000

76,000

26,600

27,000

53,600

39,000

78,000

27,300

27,000

54,300

40,000

80,000

28,000

27,000

55,000

Table 3: Calculation of sales, variable costs, total fixed costs and total costs for the assumption 2

Graph 2: Relationship of sales, variable costs, total fixed costs and total costs for the assumption 2

So the break-even point would be 20,800 cups of hot Latte approximately. The two assumptions proof the more variables and total fixed costs I have, the more effort I have to put for selling the hot Latte to achieve the break-even point.

Break-even Point Analysis could be useful for people who are going to start their business like we’ve done for our FlowScarf as well. The FRM course might not go into the deep detail as accounting or financial people do, but it has opened my eyes for learning the financial part of business in the future.

Cheers,