Entering the module
One sentence: a business lives when the price covers everything and the money arrives earlier than you have to pay it out — which is why a small business is first worked out on paper and only then started.
Chapters:
- What it costs me: direct and indirect costs
- What a good price is
- At zero: the break-even point
- Three levers: how the break-even point moves
- Profit and cash are not the same: cash flow week by week
- How much money I need to start
- Where to get money — and what the plan is → The iron principle of the module
For the youngest · ages 6–7
🐣 The youngest: If you sell lemonade, you first buy lemons and cups. The price of a cup has to bring back the money for them. The more cups you sell, the more coins come back. When you have got back everything you spent, what is left is profit — what you keep.
Play together (5 minutes): Your child makes 5 cards with drawings and decides how many coins one costs. Count together how many cards they need to "sell" at home to get back 3 coins for the paper and felt-tip pens.
A question for the evening: "What would you sell at your own stall, and why?"
A game from the catalogue: PR-02 "The lemonade stand on the rug" — https://pecuvo.eu/igri/katalog/#pr-02 (in Bulgarian)
Chapter 1 · What it costs me: direct and indirect costs
👧 Child You make lemonade at €1 a cup. Lemons, sugar, a cup — that is the money for every cup. But the table you bought for the stall you pay for once, however many cups you sell.
🧑 Teenager
- Direct (variable) costs — they grow with every item sold: raw materials, packaging, commission.
- Indirect (fixed) costs — you pay them even if you sell nothing: rent, wages, accounting, internet.
The full cost of one item = direct costs + a share of the indirect costs. If you leave out the indirect costs, your price looks better than it is.
🧔 Adult The most common mistake at the start: only the cost of the "product" (flour, coffee) is counted, while the rent, VAT, the owner's pay, depreciation and the "invisible" costs (bank fees, card fees, maintenance) are left out. The result is a business that sells a lot and still makes a loss. Rule [P]: write down every cost for at least one month — that is your real "price data".
🏗 Business: set aside your own pay as a cost. If it is not in the price, the business lives at your expense.
Myth → truth
- Myth: "My price is good because it's lower than the competition's."
- Truth: a price is good if it covers the full cost and leaves a profit. A low price with a loss on every item is slow bankruptcy.
Who profits? Whoever knows their costs. Whoever doesn't pays for "turnover" with someone else's work.
Scene for 3D: a cup of lemonade divided into layers: lemons, sugar, cup (direct), and underneath a base — table, rent, time (indirect).
→ Continue at the source
- European Commission — "Your Europe: Starting a business" ✔: https://europa.eu/youreurope/business/lifecycle/starting/index_en.htm
- Example: Bulgaria — Bulgarian Small and Medium Enterprises Promotion Agency (BSMEPA), information for start-ups: https://sme.government.bg ✔ (in Bulgarian). In another country: the national agency or programme for small businesses and start-ups.
Chapter 2 · What a good price is
👧 Child If the price is very high, nobody buys. If it is very low, you have nothing left to buy new lemons. You look for the middle.
🧑 Teenager A good price [P]:
- covers the full cost;
- leaves a profit — so the business can grow and have a reserve;
- is competitive enough to make sales;
- tells the truth about quality (a price that is too low sometimes puts people off).
🧔 Adult The elements of a price: cost + profit + VAT (if you are registered) + discounts/commissions. VAT is not your profit — you collect it and pay it over ✔ (the general rule of VAT). So, once registered, work out your price with and without VAT and check which one you see in your table.
Example (fictional): direct costs €0.80, share of indirect costs €0.40, desired profit €0.30 → price before VAT €1.50. If VAT is added, the customer pays a higher price, and your income is €1.50.
VAT — the EU rule. Member States may exempt small enterprises from VAT if their annual turnover in that country does not exceed a threshold set by the country, which may not be higher than €85,000 (Council Directive 2006/112/EC, Article 284(1), as replaced by Directive (EU) 2020/285, applicable from 1 January 2025) ✔. A small business may also use the exemption in other EU countries (the cross-border SME scheme) if its total EU-wide turnover stays under €100,000 and it does not exceed the national threshold in any country where it operates ✔ (Directive 2006/112/EC, Article 284(2), as replaced by Directive (EU) 2020/285; European Commission, Your Europe, "VAT exemptions", opened 21.10.2026). Above the threshold, registration for VAT becomes compulsory.
Example: Bulgaria — From 01.01.2026, registration under the Value Added Tax Act (VATA, ЗДДС) is compulsory when annual turnover in the country exceeds €51,130; the application is filed within 7 days of exceeding the threshold ✔ (National Revenue Agency (NRA), "Registration under the VATA", opened 21.10.2026).
Check in your country — on the tax authority's website, look for: the VAT registration threshold for small businesses, how turnover is counted (which period), the deadline for applying once you exceed it, and the standard and reduced VAT rates. Your Europe → "VAT exemptions" is a neutral starting point.
🏗 Business: test the price little by little (as an experiment), not once and for all.
Myth → truth
- Myth: "The cheaper, the more customers."
- Truth: up to a point. Below a certain price you lose on every sale and speed up the problem.
Who profits? The customer — a fair price; the business — lasting income.
Scene for 3D: a pair of scales: on one side the costs as bricks, on the other the price as coins. The child adds coins until the scales balance and a little "profit" is left over.
→ Continue at the source
- Council Directive 2006/112/EC, Article 284, as amended by Directive (EU) 2020/285 — EUR-Lex: https://eur-lex.europa.eu/eli/dir/2020/285/oj ✔ (text read at publications.europa.eu, CELEX 32020L0285, for the module "Income")
- European Commission — Your Europe, "VAT exemptions": https://europa.eu/youreurope/business/taxation/vat/vat-exemptions/index_en.htm ✔ (opened 21.10.2026)
- Example: Bulgaria — NRA, "Registration under the VATA" (from 01.01.2026, compulsory registration at annual turnover in the country above €51,130; application within 7 days of exceeding it): https://nra.bg/wps/portal/nra/taxes/dds-v-balgariya/registratsiya-po-zdds/registraciq-po-zdds ✔ (opened 21.10.2026; in Bulgarian).
Chapter 3 · At zero: the break-even point
👧 Child How many cups of lemonade do you need to sell to get back the money for the table and the lemons? After that number you start to earn.
🧑 Teenager The break-even point is the number of sales at which income = costs — neither profit nor loss. You get there in three steps:
- How much stays in your pocket from one sale after you take away the direct costs? (price − direct costs = margin per item)
- How much money a month do you need just to keep the door open? (the indirect costs)
- Divide the second sum by the first — you get the number of sales from which profit begins. (indirect costs ÷ margin)
🧔 Adult
Formula: Break-even point (items) = monthly indirect costs ÷ (price − direct costs per item).
Example (fictional): a café.
- price of a coffee: €2.00; direct costs: €0.80 → gross profit €1.20 per coffee;
- indirect costs per month (rent, wages, bills, accounting): €1,800;
- break-even point: 1,800 ÷ 1.20 = 1,500 coffees a month → over 30 days — 50 a day ✔ (calculated).
This number is the smallest number of customers your business needs. If 30 people walk past a day and you need 50 — look for a different price, a different rent or a different place.
🏗 Business: calculate it for your main product; if you have several, use a weighted average.
Myth → truth
- Myth: "If I'm selling, I'm making money."
- Truth: until you pass the break-even point, sales only cover costs.
Who profits? Whoever does the sums before renting premises.
Scene for 3D: a mountain with a sign "break-even point" on its slope. The child climbs and sees that right at the top it lights up green.
→ Continue at the source
- Local resource (Bulgaria): BASE Program — "Handbook for a successful business" (free; only in Bulgarian and Ukrainian — there is no English edition on the site): https://baseprogram.bg/uchebnik/ ✔ (the address was opened 19.10.2026; a form is filled in to download it). For readers outside Bulgaria — see the local start-up programmes in your country.
- A free textbook on management accounting: OpenStax, "Principles of Accounting, Volume 2: Managerial Accounting", section 3.2 "Calculate a Break-Even Point in Units and Dollars": https://openstax.org/books/principles-managerial-accounting/pages/3-2-calculate-a-break-even-point-in-units-and-dollars ✔ (opened 21.10.2026).
Chapter 4 · Three levers: how the break-even point moves
👧 Child If it is too hard to sell 50 cups, you can: make each cup cheaper to prepare, sell it for a little more, or pay less for the table.
🧑 Teenager The break-even point is moved by three knobs — and by nothing else:
- the price (or what you sell);
- the cost of one item — raw materials, packaging, commission;
- the fixed monthly costs — rent, wages, bills.
Turn one knob a little, count again and compare. That way you see which one works best.
🧔 Adult Example (continued): if you raise the price to €2.20 (gross €1.40): 1,800 ÷ 1.40 = 1,286 coffees (≈43 a day) ✔. If you change supplier and direct costs fall to €0.70 (gross €1.30): 1,800 ÷ 1.30 ≈ 1,385 (≈46 a day) ✔. If you cut the rent and indirect costs fall to €1,500 (with gross €1.20): 1,500 ÷ 1.20 = 1,250 (≈42 a day) ✔.
The lesson: the first model is rarely the final one. The winner is whoever changes it quickly and calmly — a small change, a measurement, a decision.
🏗 Business: write down the changes and the results — this is your "log of hypotheses".
Myth → truth
- Myth: "Either I succeed with my first model, or I'm not cut out for business."
- Truth: the first model is rarely the final one. Success lies in the iterations.
Who profits? Whoever changes in time.
Scene for 3D: a control panel with three knobs: price, direct costs, indirect costs. The child turns a knob and watches the mountain get lower or higher.
→ Continue at the source
- Steve Blank and Bob Dorf, The Startup Owner's Manual — testing hypotheses ✔ (Blank & Dorf, K&S Ranch, 2012).
- Module 11 — business plan and hypotheses.
Chapter 5 · Profit and cash are not the same: cash flow week by week
👧 Child You might sell lots of lemonade, but if the money comes on Friday and you have to pay for the lemons on Monday, on Wednesday you have nothing to work with.
🧑 Teenager Profit is the difference between income and costs over a period. Cash flow is what actually comes in and goes out, and when. A business can make a profit on paper and still run out of money on Wednesday.
🧔 Adult A worksheet from a small shop (anonymised, with round numbers) shows: daily income is almost constant (≈500 units a day), but costs come in heaps — stock deliveries at the start of the week, wages and bills on set days. As a result, some weeks end in the red (for example −930 units) despite steady income, and others in the black. Lesson [P]:
- make a weekly cash plan, not only a monthly one (Module 9, Chapter 5);
- spread the big payments (stock, wages, VAT) over time if you can;
- keep a reserve for the "bad" weeks (Module 8, principle 2);
- track how many weeks your money will last (Module 8, principle 7).
🏗 Business: count the days between "I pay the supplier" and "I get paid by the customer". The longer they are, the more working capital you need.
Myth → truth
- Myth: "If the month ends in the black, there's no problem."
- Truth: companies go bankrupt while in profit — because the money arrived late, not because there was no profit (Module 8, principle 8).
Who profits? Whoever watches the week.
Scene for 3D: a river with a dam: the inflow (income) is steady, the outflow comes in waves. When the reservoir is almost empty, the child opens a sluice gate called "reserve".
→ Continue at the source
- Module 8 — principles 7 and 8.
- Module 9 — the tool, the weekly balance.
Chapter 6 · How much money I need to start
👧 Child Before you open a stall, count what you need to buy the first time — a table, an umbrella, a sign, the first lemons.
🧑 Teenager Pre-opening costs are those before the first sale: equipment, refurbishment, initial fees, licences, advertising, first stock. Add to them working capital — the money you will need until the business starts to pay for itself.
🧔 Adult A template for the start-up table [P]: | Group | Examples | |---|---| | Furniture and equipment | appliances, furniture, machines | | Refurbishment and installations | major repairs, fitting | | Initial fees | registration, permits, licences | | First stock | raw materials, supplies | | Launch advertising | sign, website, promotions | | Working capital | rent, wages and bills for the first few months | | Reserve | for the unexpected |
Rule [P]: plan on the gloomy side (lower income, slower payments), not the rosy one. A business that survives the "gloomy" plan survives the real one too.
🏗 Business: make a table with the same rows; when Pecuvo publishes its own blank template, you will use it from your wallet (Module 9).
Myth → truth
- Myth: "Start-up money = money for equipment."
- Truth: what is most often missing is working capital for the first months.
Who profits? Whoever doesn't start "on the edge".
Scene for 3D: a suitcase being filled at the door of the business. The child sees that the space left for "working capital" is the biggest.
→ Continue at the source
- European Commission, Your Europe — starting a business ✔ · Example: Bulgaria — BSMEPA (https://sme.government.bg) ✔ (in Bulgarian)
- Module 11 — programmes and grants.
Chapter 7 · Where to get money — and what the plan is
👧 Child If you have a big idea that costs more than you have, you can ask for help — but you have to explain clearly what you are going to do.
🧑 Teenager Sources of money for a business [F]: your own, family and friends, a bank loan, a grant/programme, an investor, pre-sales. Each one has a price: a loan — interest; an investor — a share; a grant — reporting and rules.
🧔 Adult The plan (the business plan) is a story with numbers: who the customer is, what the product is, how it is sold, what it costs, how it is financed. The numbers from Chapters 1–6 are its backbone. A widely used framework for a short business plan is the one by Sequoia Capital (company purpose, problem, solution, why now, market potential, competition and alternatives, business model, team, financials, vision) ✔ (Sequoia's original, opened 21.10.2026) — public, not ours. For grants and programmes — Module 11.
Two principles:
- Don't take a loan before you know your break-even point.
- Don't sign up to "guaranteed returns" from anyone — business is not like that (the module "Fraud, pyramids and getting rich quick").
🏗 Business: write down where every euro comes from — your own, a loan, a grant — because each one has different reporting.
Myth → truth
- Myth: "The idea is enough for an investor."
- Truth: an investor buys a plan with numbers and the people who carry it out.
Who profits? Whoever understands the price of each source of money.
Scene for 3D: five pipes leading into one tank; each lets in water of a different colour and has a handle marked "conditions". The child chooses a combination.
→ Continue at the source
- Local resource (Bulgaria): BASE Program — "Handbook for a successful business" (free; only in Bulgarian and Ukrainian — there is no English edition on the site): https://baseprogram.bg/uchebnik/ ✔ (the address was opened 19.10.2026; a form is filled in to download it). For readers outside Bulgaria — see the local start-up programmes in your country.
- Sequoia Capital — "Writing a Business Plan": https://sequoiacap.com/article/writing-a-business-plan/ ✔ (opened 21.10.2026).
- Module 11, Module 10 (Flow 3) and grants.varnahub.com (for NGOs; in Bulgarian).
The iron principle of the module
Before you start, work out your price, your break-even point and your weekly cash. Profit is an opinion, cash flow is a fact, and a reserve buys you time to fix the model.
- 👧 Child: count everything — the table and the lemons.
- 🧑 Teenager: three questions for the break-even point; three levers.
- 🧔 Adult:
- full cost (including indirect costs);
- break-even point;
- weekly cash plan;
- working capital for the first months.
- 🏗 Business: your own pay in the price; a log of hypotheses; where every euro comes from.
Your step in Pecuvo: (1) Create a space "Project:
Check yourself (3 questions per level)
- 👧 1. Which costs do you pay for every cup, and which ones once? 2. What is the break-even point in the lemonade example? 3. Why do we keep money aside for "the first weeks"?
- 🧑 1. What is the formula for the break-even point? 2. What are the three levers? 3. What is the difference between profit and cash flow?
- 🧔 1. Calculate: price €3, direct costs €1.20, indirect costs €900 a month — how many items a month (500)? 2. Why can a profitable business run out of money? 3. What goes into working capital at the start?
Sources (summary)
- ✔ The calculations in the examples (1,800 ÷ 1.20 = 1,500; 1,800 ÷ 1.40 ≈ 1,286; 1,800 ÷ 1.30 ≈ 1,385; 1,500 ÷ 1.20 = 1,250) — checked arithmetically; the examples are fictional.
- ✔ BASE Program (baseprogram.bg) — handbook for a successful business (in Bulgarian and Ukrainian; local resource).
- Checked on 19.10 and 21.10.2026 (the status is next to each line above): Your Europe; BSMEPA; OpenStax, Managerial Accounting (break-even); Blank & Dorf; Sequoia Capital.
- EU (added for the English version, 21.10.2026): Council Directive 2006/112/EC, Article 284, as replaced by Directive (EU) 2020/285 (threshold up to €85,000; applies from 1 January 2025) ✔; Your Europe, "VAT exemptions" (cross-border SME scheme, EU-wide turnover under €100,000) ✔.
- Example: Bulgaria: NRA, "Registration under the VATA" (threshold €51,130 from 01.01.2026) ✔.
- The examples and wording are original.