The safety margin refers to the financial gap between current or expected business performance and a critical threshold beyond which losses occur.<\/p>\n
It shows how much turnover, profits or a company\u2019s value can fall before a company falls below the break-even point or an investment becomes unprofitable. The larger the margin of safety, the better a company can cope with unexpected developments.<\/p>\n
In business planning, the safety margin is often calculated on the basis of the break-even point:<\/p>\n
Safety margin = actual or projected turnover \u2013 break-even turnover<\/strong><\/p>\n The percentage calculation is as follows:<\/p>\n Safety margin as a percentage = (Turnover \u2013 Break-even turnover) \u00f7 Turnover \u00d7 100<\/strong><\/p>\n One example:<\/p>\n In this example, turnover could fall by 20 per cent before the company breaks even.<\/p>\n A safety margin can help businesses and start-ups in this regard:<\/p>\n The term is also used when valuing investments. Investors compare the estimated intrinsic value of a company with the purchase price. If the purchase price is significantly below the estimated value of the company, there is a margin of safety.<\/p>\n Typical factors that can reduce a safety margin include:<\/p>\n A large safety margin provides greater financial flexibility. However, it is no guarantee that a company will remain profitable in the long term. The calculation is based on assumptions that may change as a result of market shifts, new competitors or unexpected costs.<\/p>\n A common mistake is to base financial planning solely on the expected best-case scenario. Founders should therefore also consider realistic and pessimistic scenarios and regularly assess the extent to which changes affect liquidity, runway and profitability.<\/p>\n innoWerft helps start-up founders to critically review their financial plans and business models, calculate various scenarios, and assess financial risks and capital requirements at an early stage.<\/p>\n ","protected":false},"excerpt":{"rendered":" The safety margin refers to the distance between the actual value of a company or project and the point at which losses would occur. It serves as a buffer to minimise risks and compensate for financial fluctuations. A larger safety margin increases the likelihood that the company will remain profitable even in difficult times.<\/p>","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","content-type":"","inline_featured_image":false,"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[47],"tags":[],"class_list":["post-14137","post","type-post","status-publish","format-standard","hentry","category-glossareintrag"],"yoast_head":"\n\n\n
\n Key figure<\/strong><\/td>\n Amount<\/strong><\/td>\n<\/tr>\n<\/thead>\n\n \n Projected turnover<\/td>\n 500.000 \u20ac<\/td>\n<\/tr>\n \n Break-even turnover<\/td>\n 400.000 \u20ac<\/td>\n<\/tr>\n \n Safety margin<\/td>\n 100.000 \u20ac<\/td>\n<\/tr>\n \n Safety margin as a percentage<\/td>\n 20 %<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \n
\n