Most small businesses in India fail with a full order book. They die of arithmetic — cash locked in receivables, prices set by copying a competitor, growth funded at rates the margins cannot carry. Five numbers, none requiring an accountant to compute, catch nearly all of it early.
Break-even: the floor under everything
Break-even units = fixed costs ÷ contribution per unit (price minus variable cost). Below that volume every sale deepens the loss; above it, contribution flows to profit. The gap between actual sales and break-even — the margin of safety — is the honest measure of how much bad news the business can absorb. The break-even calculator computes both, plus the operating leverage that says how violently profit responds to a change in sales.
Margin versus markup: the pricing trap
Markup is on cost; margin is on price — and confusing them quietly underprices everything. A 25% markup is a 20% margin; the difference compounds across a catalogue. Price from target margin, not habitual markup, and know all three layers — gross, operating and net — because each answers a different question about where money leaks. The profit margin calculator keeps the definitions straight. (The margin calculator is the trading margin — an unrelated number that shares a name.)
The cash conversion cycle
Profit is an opinion; cash is a fact. The working capital cycle — days your money sits in inventory, plus days customers take to pay, minus days suppliers give you — measures how long each rupee is trapped between spending and collection. A growing, profitable business with a long cycle can literally expand itself into insolvency, because every new order locks up more cash. The working capital calculator computes the cycle and the funding it demands; the burn rate calculator answers the runway question for anyone spending ahead of revenue.
What the lender will check
Before extending a loan, a banker computes your DSCR — cash operating income divided by the year's debt service. Below about 1.2× most lenders hesitate, because a ratio near 1 means one soft quarter misses a payment. Compute it on yourself with the DSCR calculator before the application: it tells you the loan size your cash flows actually support, which is the negotiation's real starting point.
GST in the operating math
Since the September 2025 rationalisation, GST runs three slabs — 5%, 18% and 40% for luxury and sin goods. Two operating rules matter more than the rates. Registered businesses pay GST only on value added — input tax credit refunds the tax on purchases, making the compliance chain (and buying from registered suppliers) worth real money; the GST calculator and ITC calculator show the flow. And quote prices GST-inclusive or exclusive deliberately — an 18% surprise at invoice time has ended plenty of client relationships.
⚠️ GST slabs, registration thresholds and lender covenants change; the September 2025 structure is current at review. Verify before relying on it — and none of this substitutes for an accountant who can see your actual books.
Key takeaway
Five numbers run a small business: break-even (with the margin of safety above it), margin computed on price rather than cost, the cash conversion cycle that decides how much growth you can fund, the DSCR a lender will compute anyway, and GST handled as an input-credit chain rather than a cost. None needs software — all five need honesty, quarterly.
More in Module 11 — Money beyond funds: salary, tax, loans and property
Decoding your CTC: why in-hand is so much less
Cost to company is what employing you costs, not what you are paid. The four layers inside a CTC, where EPF and gratuity go, and what basic salary decides.
Old vs new tax regime: the choice that decides everything else
The new regime is the default and usually the winner — but not always. Where the break-even sits, and why the regime decides if ELSS, HRA and 80D matter.
Advance tax and TDS: how India collects before you file
TDS is a running prepayment, not the final bill; advance tax fills the gap in four dated instalments. The 15/45/75/100 calendar and the presumptive shortcut.
ESOPs, RSUs and ESPPs: taxed twice, at two different prices
Slab tax on the discount when shares become yours, capital gains from that day's FMV when you sell. Why tax can fall due on paper value, and the basis error.
Freelancing full-time: the 50% deal most professionals miss
Presumptive taxation lets a qualifying professional declare half of gross receipts as profit — no books, no audit. How it works, and how it compares to salary.
How an EMI actually works (and the flat-rate trick)
Interest on the outstanding balance first, principal with the rest — so early years repay very little. Why tenure sets total interest, and the flat-rate trap.
A surplus and a loan: prepay, refinance or invest?
Prepayment is a guaranteed, tax-free return equal to your loan rate — cut the tenure, not the EMI. When a balance transfer or investing the surplus beats it.
Rent vs buy: the honest math
Terminal net worth on two fully-specified paths, with the renter investing every rupee the buyer sinks. The two assumptions and the tax change that decide it.
The small savings family: PPF, SSY, NSC, KVP, SCSS and kin
One sovereign family, priced quarterly. Which schemes compound, which pay income, which are tax-exempt — and why after-tax yield, not the poster rate, matters.
Insurance is not an investment: term plans and the LIC question
Bundled policies do both jobs badly. Sizing a term cover from needs, not folklore, and judging an endowment you own on forward numbers, not on premiums paid.
What trading actually costs: beyond zero brokerage
STT, exchange charges, GST, stamp duty and DP fees stack on every trade and no broker can waive them. The break-even move, and what leverage really multiplies.
Section 80C: the whole ₹1.5 lakh menu, not just ELSS
A shared ceiling, not a product — and EPF, home-loan principal and tuition fees may already fill it. Count the headroom before you buy anything to fill it with.
Section 80D: two buckets, and the cash rule that voids most claims
₹25,000 for your family and another ₹25,000 for your parents, each rising to ₹50,000 at 60 — with the check-up allowance inside those limits.
HRA exemption: the least of three numbers, and which one binds
Actual HRA, rent minus 10% of basic, or 50/40% of basic — all keyed to basic salary rather than CTC, and all available only under the old regime.
Property capital gains: what actually changed when indexation went
Bought before 23 July 2024, a resident pays the lower of 12.5% flat and 20% indexed — but that relief caps the tax payable, not the gain itself.
Home loan eligibility: what a bank will lend is not what you can afford
FOIR caps total EMIs against income and subtracts existing loans in full; LTV caps the loan against the property. Neither asks what you can afford.
Education loans and Section 80E: the deduction with no ceiling
Uncapped on interest, but only for eight years from the year repayment starts — so the window, not the amount, is the constraint that should set your tenure.
From the blog
Break-even for a small business: what a price cut costs
10 Oct 2026
A namkeen unit with ₹2.16 lakh of monthly fixed costs breaks even at 12,000 packs. A 5% price cut pushes that to 13,936 and cuts profit by 69%.
DSCR for a business loan: the ratio your bank checks
10 Oct 2026
A lab earning ₹28 lakh a year before debt asks for ₹80 lakh over 5 years and gets a DSCR of 1.19x, below the usual 1.25x. Four ways to fix it, worked out.
GST input tax credit: one product, four invoices
10 Oct 2026
A ₹2,200 product at 18% GST passes four hands; each pays tax only on its value added, ₹396 in all. Why credit is denied, and what a missing GSTR-1 costs.