1. Why is it important for an entrepreneur to know his or her company’s break-even point?
2. What steps can an entrepreneur take when his or her business slips below its break-even point?

Guy Gottenbusch, owner of the Servatii Pastry Shop & Deli in Cincinnati, Ohio, was feeling the pinch from two sides. The cost of the flour, eggs, and other products he used in his baking were cutting into his shop’s profits, and, at the same time, customers were cutting back their spending, choosing smaller, less expensive items from his line of baked goods and sandwiches. Having come from a long line of bakers, Gottenbusch knew well the dangers of allowing his business, which sells specialty items such as Vienna tortes and delicate mousses as well as more common fare such as bagels and muffins, to slip below its break-even point. “My overhead was totally fixed, and I knew if I lost my sales, I would lose profitability,” he says.