10 KiB
10 KiB
Financial Models & Projections
Capital Requirements Summary
Phase 1: Integration Consulting
Total Capital: $500
- LLC registration: $100-300
- Website (Carrd/WordPress): $0-200
- Business cards: $50
- Marketing materials: $50
Source: Personal funds (out of pocket)
Phase 2: Edge Monitoring Platform
Total Capital: $1,000
- GTHost server (2 months): $200-300
- Development/testing: Nights/weekends (sweat equity)
Source: Phase 1 consulting revenue
Phase 3: GPU-Powered AI
Total Capital: $3,000
- GPU server (3 months): $1,050-1,350
- ML model development: Nights/weekends
- Marketing materials: $200
Source: Phase 2 platform profits
TOTAL 18-MONTH CAPITAL: $4,500 (self-funded)
Revenue Models by Phase
Phase 1: Consulting Only
Revenue Streams:
- Hourly consulting: $150-200/hour
- Project fees: $15k-40k per project
- Optional retainer: $2k-5k/month
Monthly Revenue Projection:
| Month | Projects | Hourly | Total Revenue |
|---|---|---|---|
| 1 | 0.5 pilot | - | $5,000 |
| 2 | - | 40hrs | $7,000 |
| 3 | 1 full | - | $25,000 |
90-Day Total: $37,000 (conservative)
Cost Structure:
- Direct costs: ~$500 (one-time setup)
- Ongoing: $50/month (website, tools)
- Gross Margin: 95%+
Phase 2: Hybrid Model
Revenue Streams:
- Consulting (declining): $10k-20k/month
- Setup fees: $5k-10k per customer
- Monitoring MRR: $1.5k-2k per customer
Monthly Revenue Evolution:
| Month | Consulting | Setup Fees | MRR | Total |
|---|---|---|---|---|
| 4 | $15,000 | $10,000 | $0 | $25,000 |
| 5 | $15,000 | $5,000 | $1,500 | $21,500 |
| 6 | $15,000 | - | $3,000 | $18,000 |
| 7 | $12,000 | $10,000 | $5,000 | $27,000 |
| 8 | $10,000 | $5,000 | $7,000 | $22,000 |
| 9 | $10,000 | - | $10,000 | $20,000 |
Month 9 Totals:
- Consulting: $10,000
- MRR: $10,000 (6-7 customers @ $1.5k avg)
- Total Monthly: $20,000
Cost Structure:
- GTHost server: $150/month
- Tools/software: $100/month
- Gross Margin: 87%
Phase 3: Recurring Revenue Focus
Revenue Streams:
- Basic monitoring: $1.5k × 10 customers = $15,000/month
- Premium AI: $5k × 4 customers = $20,000/month
- Occasional consulting: $5,000/month
- Total MRR: $40,000/month
Customer Mix (Month 18):
| Tier | Customers | Price/Month | Revenue |
|---|---|---|---|
| Basic | 10 | $1,500 | $15,000 |
| Premium | 4 | $5,000 | $20,000 |
| Consulting | - | - | $5,000 |
| Total | 14 | - | $40,000 |
Cost Structure:
- GTHost servers (2): $550/month
- Contractor: $5,000/month
- Tools/software: $200/month
- Total costs: $5,750/month
- Gross Margin: 86%
- Net Profit: $34,250/month
18-Month Financial Projection
Revenue Breakdown
| Month | Consulting | Setup Fees | Basic MRR | Premium MRR | Total Revenue |
|---|---|---|---|---|---|
| 1 | $5,000 | - | - | - | $5,000 |
| 2 | $7,000 | - | - | - | $7,000 |
| 3 | $25,000 | - | - | - | $25,000 |
| 4 | $15,000 | $10,000 | - | - | $25,000 |
| 5 | $15,000 | $5,000 | $1,500 | - | $21,500 |
| 6 | $15,000 | - | $3,000 | - | $18,000 |
| 7 | $12,000 | $10,000 | $5,000 | - | $27,000 |
| 8 | $10,000 | $5,000 | $7,000 | - | $22,000 |
| 9 | $10,000 | - | $10,000 | - | $20,000 |
| 10 | $8,000 | $10,000 | $12,000 | - | $30,000 |
| 11 | $7,000 | - | $13,500 | - | $20,500 |
| 12 | $5,000 | $10,000 | $15,000 | $5,000 | $35,000 |
| 13 | $5,000 | $5,000 | $15,000 | $10,000 | $35,000 |
| 14 | $5,000 | - | $15,000 | $10,000 | $30,000 |
| 15 | $5,000 | $10,000 | $15,000 | $15,000 | $45,000 |
| 16 | $5,000 | - | $15,000 | $15,000 | $35,000 |
| 17 | $5,000 | - | $15,000 | $20,000 | $40,000 |
| 18 | $5,000 | - | $15,000 | $20,000 | $40,000 |
Cumulative 18 Months: $480,000
Cost Breakdown
| Month | Infrastructure | Labor | Tools | Marketing | Total Costs |
|---|---|---|---|---|---|
| 1 | - | - | $500 | - | $500 |
| 2 | - | - | $50 | - | $50 |
| 3 | - | - | $50 | - | $50 |
| 4 | $150 | - | $100 | - | $250 |
| 5 | $150 | - | $100 | - | $250 |
| 6 | $150 | - | $100 | - | $250 |
| 7 | $150 | - | $100 | $200 | $450 |
| 8 | $150 | - | $100 | - | $250 |
| 9 | $150 | - | $100 | - | $250 |
| 10 | $550 | - | $200 | - | $750 |
| 11 | $550 | - | $200 | - | $750 |
| 12 | $550 | - | $200 | - | $750 |
| 13 | $550 | $3,000 | $200 | $200 | $3,950 |
| 14 | $550 | $3,000 | $200 | - | $3,750 |
| 15 | $550 | $4,000 | $200 | - | $4,750 |
| 16 | $550 | $5,000 | $200 | - | $5,750 |
| 17 | $550 | $5,000 | $200 | - | $5,750 |
| 18 | $550 | $5,000 | $200 | - | $5,750 |
Cumulative 18 Months: $33,950
Profit Summary
18-Month Totals:
- Total Revenue: $480,000
- Total Costs: $33,950
- Total Profit: $446,050
- Average Monthly Profit: $24,780
- ROI: 9,921% (on $4,500 invested)
Month 18 Snapshot:
- Monthly Revenue: $40,000
- Monthly Costs: $5,750
- Monthly Profit: $34,250
- Annual Run Rate: $411,000/year profit
Break-Even Analysis
Phase 1 (Consulting)
Break-even: Month 1
- Need: 1 small project ($5k-10k)
- Covers: All startup costs
Phase 2 (Platform)
Break-even: 2-3 monitoring customers
- Need: $3k-4.5k MRR
- Covers: Infrastructure + development costs
Phase 3 (Premium AI)
Break-even: 1-2 premium customers
- Need: $5k-10k from premium tier
- Covers: GPU server costs
Customer Lifetime Value (LTV) Analysis
Basic Monitoring Customer
Monthly: $1,500
Average Retention: 24 months
LTV: $36,000
Setup Fee: $5,000
Total LTV: $41,000
Premium AI Customer
Monthly: $5,000
Average Retention: 30 months (stickier)
LTV: $150,000
Setup Fee: $10,000
Total LTV: $160,000
Customer Acquisition Cost (CAC)
Phase 1 (Consulting)
- Outreach time: ~10 hours per customer
- Marketing: $50-100
- Total CAC: $500-700 (labor + marketing)
- Payback Period: First project (immediate)
Phase 2 (Platform)
- Transition from consulting: $0 (existing customer)
- New customer: ~20 hours + $200 marketing
- Total CAC: $1,000-1,500
- Payback Period: 0.7-1.0 months
Phase 3 (Premium)
- Upgrade from basic: $500 (sales time)
- New premium customer: ~40 hours + $500 marketing
- Total CAC: $2,500-4,000
- Payback Period: 0.5-0.8 months
LTV:CAC Ratios
Phase 1 (Consulting):
- Project LTV: $25,000 (avg)
- CAC: $600
- Ratio: 42:1 ✅ Excellent
Phase 2 (Basic Monitoring):
- LTV: $41,000
- CAC: $1,250 (avg)
- Ratio: 33:1 ✅ Excellent
Phase 3 (Premium AI):
- LTV: $160,000
- CAC: $3,000 (avg)
- Ratio: 53:1 ✅ Excellent
Industry Benchmark: 3:1 is good, 5:1+ is excellent
Pricing Strategy
Phase 1: Consulting
Hourly Rate Logic:
- $150-200/hour = competitive for OT expertise
- Positions below enterprise consultants ($300-500/hour)
- Above general IT ($75-150/hour)
Project Pricing:
- Small (40-80 hours): $15k-25k
- Medium (100-150 hours): $25k-35k
- Large (150-200 hours): $35k-50k
Phase 2: Monitoring Platform
Tier Logic:
| Tier | Monthly | Setup | Target Customer |
|---|---|---|---|
| Basic | $1,500 | $5,000 | 1 production line |
| Pro | $2,000 | $7,500 | 2-3 lines |
| Enterprise | $3,000+ | $10,000+ | Full facility |
Pricing Rationale:
- 10x cheaper than enterprise solutions ($15k-30k/month)
- 2-3x more than DIY (but includes support)
- Predictable vs cloud per-message pricing
Phase 3: Premium AI
Tier Logic:
| Tier | Monthly | Setup | Differentiation |
|---|---|---|---|
| AI Basic | $4,000 | $10,000 | Predictive maintenance |
| AI Pro | $6,000 | $15,000 | + Computer vision |
| AI Enterprise | $8,000+ | $20,000+ | Custom models |
Value Justification:
- If prevents ONE unplanned downtime event: $50k-500k saved
- If extends equipment life 10%: $100k+ value
- If improves quality 2%: Hundreds of thousands in savings
Cash Flow Management
Key Principles
- Consulting Funds Platform: Use project revenue for infrastructure
- 50% Deposits: Always collect upfront on projects
- Monthly Billing: Subscriptions billed 1st of month
- 3-Month Runway: Maintain in reserves
- Reinvest Profits: Use for growth until $100k saved
Month-to-Month Cash Flow
Months 1-3 (Pure Consulting):
- Inflows: Project payments
- Outflows: Minimal ($50-500/month)
- Accumulation: $20k-40k cash reserve
Months 4-9 (Platform Build):
- Inflows: Consulting + setup fees + MRR
- Outflows: Infrastructure + time
- Accumulation: Building to $50k-80k
Months 10-18 (Scale):
- Inflows: MRR + premium + occasional projects
- Outflows: Infrastructure + contractor
- Accumulation: $100k-200k reserves
Scenario Analysis
Conservative Scenario
- 50% of projected customer count
- 75% of projected pricing
- Month 18 Revenue: $20,000/month
- Month 18 Profit: $15,000/month
- Still viable: Yes, above typical job salary
Base Case (Projected)
- As modeled above
- Month 18 Revenue: $40,000/month
- Month 18 Profit: $34,000/month
Optimistic Scenario
- 150% of projected customers
- Faster phase transitions
- Month 18 Revenue: $60,000/month
- Month 18 Profit: $52,000/month
All scenarios are profitable and viable.
Exit/Growth Options
Option 1: Keep Bootstrapping
- Grow to 50-100 customers
- $150k-300k/month revenue
- Hire 5-10 person team
- Owner salary: $200k-500k+/year
Option 2: Raise Capital (Year 2-3)
- Platform proven at scale
- Raise $1-3M seed round
- Accelerate growth (sales, marketing)
- Exit in 3-5 years
Option 3: Strategic Acquisition
- System integrator acquires for customer base
- Controls vendor buys for technology
- Valuation: 3-5x annual revenue ($1.5M-7.5M range)
Option 4: Lifestyle Business
- Stay at 20-30 customers
- $50k-100k/month profit
- 1-2 person operation
- Indefinite sustainable income
Key Financial Metrics (Month 18)
Revenue Metrics:
- MRR: $35,000 (recurring only)
- ARR: $420,000
- Total Revenue (with consulting): $480,000/year
Profitability:
- Gross Margin: 86%
- Net Margin: 85%
- Monthly Profit: $34,250
Efficiency:
- CAC Payback: <1 month
- LTV:CAC: 33-53:1
- Revenue per customer: $2,500-5,000
Growth:
- MRR Growth Rate: 20-30%/month (early)
- Customer Count: 14
- Churn Rate: <10% (target)
Next Steps
See go-to-market.md for customer acquisition strategy.
Last Updated: December 2025