To Burn or Not to Burn? That is not even a valid question

Numbers numbers numbers… this was definitely the CFO’s week.

This week we did two things: 1) further refine our revenue model and our pricing scheme, and 2) to identify the key costs and activities that will make our companies work. And since we are still catching up, we decided to re-segment our group, with each group focusing on either one of these large theme.

To validate our revenue model, we did some more interviews with furniture makers at CCA, collecting their opinion on what, in their opinion would be the ideal pricing scheme. On the other hand, we also listed our some of our key activities and tallied up their cost with a spread sheet, from which we also calculated the startup fund we would need for a runway of 12 months. As the CFO, I was the one who took charge of these numbers related mattered, and honestly quite enjoyed the role I got myself into.

But (as there is also one), false positives always seems to be a recurrent theme in our team’s work. As we were going through our revenue model and considering that in tandem with our costs and key activities, we were quite surprised at how low our cost will be, at only about $1,500 a month. Later we realised that it was because I had almost entirely ignored our own salary costs, working on the assumptions that only costs directly related to our services (marginal costs) are the only ones that matter.

And this naturally spelled out our next step. We will need to keep adding on to include all potential expenses to get closer to what the true cost of running our company will be, whilst taking into account our revenue model and whether that will be truly appropriate.