MEPX
Chapter 3 of 10All chapters
  1. 1The business model
  2. 2Customers
  3. 3The money side
  4. 4Competition and advantage
  5. 5Operations
  6. 6Legal structure
  7. 7People
  8. 8Getting customers
  9. 9Risk and resilience
  10. 10Growing

Chapter 3 of 10

The money side

Revenue, costs, cash.

Three numbers

Revenue is money in. Costs split into fixed and variable. Cash is what is actually available. Profit and cash diverge constantly, and only one of them pays wages.

  • Break even is fixed costs divided by contribution per unit.
  • Growth consumes cash before it produces it.

Pricing

Price on the value delivered rather than on cost plus a margin. Underpricing is more common than overpricing and is much harder to correct later.