case study

Break-even analysis is a technique widely used by production management and management accountants. It is based on categorising production costs between those which are "variable" (costs that change when the production output changes) and those that are "fixed" (costs not directly related to the volume of production).
Firstly, let's concentrate what are the advantages of break even analysis.
It is cheap to carry out and it can show the profits/losses at varying levels of output.
It provides a simple picture of a business - a new business will often have to present a break-even analysis to its bank in order to get a loan.
A break-even analysis can have some disadvantages:
It assumes that everything produced is sold whereas it is often the case that not all output will be sold.
It assumes that all of the output is sold at the same price - often a business will have to lower its price in order to increase its sales.
It always analysis only one production.

From this case study we can see , when Nick Hess opening of a new store nearby selling similar products led to sales falling and break even becoming a distant possibility, and after months of trading, it due to mounting loss. Nick Hess said he had underestimated its impact. Ok, according to above, we need to know what reasons made he underestimate.
Location: customer, if they choose a place near swimming pool I do not think people who want to buy some vegetables after swim And also the money of rent and maybe competitors around their store.
Budget: also rent, transportation,stock etc.
Market research
So from above, we can see Mr Hess did not notice these point before he opened a new store, therefor he get loss.

When an entrepreneur starting a new business, they do not have a complete organisation of their business, for example it is difficult to categorization all of the fixed cost and variable cost. Also break even analysis always analysis only one production, but I think a new business not only have one product. Also not sure about the profit and loss, because you just start a business.

sorry MR CHRIS Not finish yet,,,sleepy.....I will finish it tomorrow.