Operating costs
Running costs, staff, revenue and the assumptions that turn them into a projection.
Running-cost categories
Rent, marketing, software, maintenance and the rest each have a step. Enter costs per month at the level you expect in your first year. Foundation multiplies them by twelve.
Payment processing works differently: enter the value of card payments you expect each month and the percentage your provider charges.
Ingredients & Recipes
Restaurants and cafés get this extra step. List each ingredient once with its price, then write a recipe per menu item. Foundation works out how much of each ingredient you'll buy from the sales volumes on Products & Revenue, so your food cost follows your menu automatically.
Human Resources
One row per role: headcount, monthly salary per person, and employer costs as a percentage of salary (payroll taxes, pension and benefits, often 15 to 30% depending on the country). Leave it at zero and your staff costs will be too low.
Products & Revenue
Each product has one of three pricing types:
| Type | For | You enter |
|---|---|---|
| Per unit | A coffee, a product, a one-off service | Price and monthly volume |
| Commission | A fee as a percentage of a transaction | Monthly value flowing through you and your percentage |
| Subscription | Recurring customers | Customers at the start and by the end of year 1, monthly price, and an optional one-time fee |
Starts after delays a product by a number of months, for example while you fit out the premises. Monthly volume is your average for the first year, not your volume once you're established. New businesses rarely run at full capacity in year one.
Financial Assumptions
| Setting | What it does |
|---|---|
| Tax rate | Tax on profit. It starts at 0%, so set your real rate. |
| Discount rate | How much less money in the future is worth to you than money today. Used for NPV. See NPV. |
| Revenue growth | Yearly growth from year 2. Keep it realistic. |
| Customer churn | For subscriptions: the share of customers who cancel each year. |
| Working capital | Months of operating cost kept as a cash buffer. |
| Projection years | How far ahead to project: usually 5, or 10 for heavy industry. |
| Unforeseen operating costs | A buffer on top of your running costs, as a percentage. |
| Depreciation | The useful life of each kind of equipment, if the defaults don't fit. |
| Energy tariffs and hours | For production sites: prices per kWh, litre and m³, and operating hours per year. |
Cost Structure
Each running cost is split into a fixed part (paid whatever you sell, like rent) and a variable part (grows with sales, like ingredients). The defaults are sensible; change them if your business differs. This split decides your break-even point and how costs grow in later years. See Break-even.