its better to group them by gross profit percentage rather than to make an estimate for each individual product.     7.Write down how much total dollar sales you expect for each product or product group.     8.Multiply the gross profit percentage by the total dollar sales to derive the dollar gross profit from each product.     9.Add together the total dollar gross profit figures to derive the total dollar gross profit from the years sales.     10.Divide the dollar gross profit by the annual sales revenue to derive the average gross profit percentage for the years sales.     Completing this gives you an average gross profit percentage for your business.     b. Forecast Gross Profit for an Existing Business     If youre already operating and have a profit and loss statement for your business from prior months, your job is even easier. Simply subtract the total cost of sales from the total revenue to get the gross profit for the period. Then, convert the dollar gross profit figures to a percentage of sales revenue by dividing total dollar gross profit by total sales for the period. The percentage gross profit figure you get will be the percentage gross profit figure you use for your break-even forecast.     If youre already operating and your expansion will change the percentage of total sales revenue that each product group brings, then you will need to forecast your new average gross profit by following the procedure for a new business listed just above.     4. Forecast Your Break-Even Sales Revenue Now that you have the fixed costs per month for your business and the average gross profit per sale, you can estimate how much revenue you will need to just break even. You can use any period you wish, although most people use a month or a year. As this chart shows, its simple to calculate. Obtain the fixed costs figure from Section F2, above, and the average gross profit percentage from F3, above. Then just divide the fixed costs by the average gross profits expressed as a decimal.   Fixed costs per   month or year Average gross profit percentage expressed as a decimal Break-even sales revenue     Example: Ronnie Ryann runs the Religious Sounds Round Table in Rye, New York. Its a small business, but she loves it dearly. The gross profit on the CDs, tapes and videos she sells is 50%. This is the same as saying that after adding up the cost of the products, packaging and postage (all variable costs), Ronnie is able to sell at double this amount. Ronnie rents 1,000 square feet for $800 per month, pays her part-time clerk $950 per month and budgets $650 per month for utilities, taxes and so forth. This means her operating expenses (all fixed costs) are $2,400 per month. (Her costs seem low because some parts of New York State are behind the inflation curve.) Therefore,