What is breakeven, and what are operational breakeven and EBITDA breakeven?
Quick answer
Breakeven is the point where you're neither making nor losing money. There are different “levels” of it — operational breakeven (your core operations cover their costs) and EBITDA breakeven (you're profitable before interest, tax and non-cash costs) — and they tell you different things about how close you are to standing on your own.
The mistake most founders make
Talking about “breakeven” as one thing, when there are several, each meaning something different. Saying you're “close to breakeven” without specifying which one can mislead you and your investors.
The levels, in plain terms
Contribution breakeven — you sell enough units for your total to cover your fixed costs (the classic breakeven). Operational breakeven — your day-to-day operations bring in enough to cover their running costs; the core business pays for itself, even if other costs remain. EBITDA breakeven — you're at zero on EBITDA (earnings before interest, tax, depreciation and amortisation), meaning your actual operating business is no longer losing money, before accounting for financing and non-cash costs. Beyond these sits full net profit breakeven, after everything.
A simple way to see it
Contribution breakeven asks “do enough sales cover my fixed costs?” EBITDA breakeven asks “is my operating business, as a whole, no longer bleeding?” Each is a milestone on the road from burning cash to real profit.
Our honest take
Know which breakeven you mean. “EBITDA breakeven” is a real milestone investors respect; a vague “nearly breakeven” isn't. Be precise — it shows you understand your own business.