Hi Sam- Excellent news you are opening a hostel. Where are you opening your hostel?
Some areas will have travellers coming through on a regular basis, like New York City or London. While other areas will be more of the "boom and bust" scenario, like my little town of Akaroa, New Zealand.
Your break even analysis will have a few different scenarios: either more guests paying a lower rate: 30 guests paying $20 per night, or less guests paying a higher rate (20 guests paying $30). Can you cut back on expenses? What does your water usage look like in the summer versus the winter?
The initial paperwork is the most daunting part of the whole process.