Planning Library · Financial model (corrected & reconciled)
The corrected baseline.
Canonical earned-revenue model. Supersedes the prior Financial Workbook, which stated the baseline Year-1 result three incompatible ways. Rebuilt on a contribution-margin basis with a standardized 26-day operating month (312/year).
What changed and why
Three errors, now fixed.
- The cash-flow sketch omitted COGS. It subtracted only fixed costs from gross revenue, ignoring ~$110K of cost of goods — producing a $42K surplus that doesn't exist. Rebuilt on a contribution-margin basis.
- The Exec Summary used a mismatched basis. A blended revenue/cost figure that matched neither the unit economics nor the scenario model. Rebuilt to derive directly from the scenario model so every section now tells one story.
- The grant-dependency ratio mixed denominators. Fixed-cost base in one row, revenue in another. Restated consistently as the share of fixed operating costs covered by earned contribution margin.
Operating calendar standardized at 26 days/month (312/year) across all streams.
§1 — Executive financial summary
Does earned activity cover the cost of keeping the doors open?
| Conservative | Baseline | Optimistic | |
|---|---|---|---|
| Café revenue | $67,392 | $117,000 | $179,712 |
| Farm stand revenue | $49,920 | $102,960 | $174,720 |
| Events (net contribution) | $10,980 | $34,890 | $58,800 |
| Contribution margin (after COGS) | $65,892 | $144,917 | $240,359 |
| Fixed operating costs | $156,000 | $190,000 | $228,000 |
| Net earned position | ($90,108) | ($45,083) | +$12,359 |
| Grant / donation to bridge | $90,108 | $45,083 | — |
| Fixed costs covered by earned margin | 42% | 76% | 105% |
At baseline, earned margin covers about three-quarters of fixed costs; the ~$45K gap is the mission layer that grants and donations fund. The optimistic run-rate fully self-funds operations with a small surplus to reinvest — the Year 2–3 goal.
§2 — Unit economics
By revenue stream.
All annualized at 312 operating days.
Café
Revenue anchor — unit = one transaction
Farm stand
Mission backbone — unit = one customer visit
Ticketed events
Margin builder — net contribution
Farm-stand margins are intentionally lower — Groundworks pays farmers above wholesale. That's the mission, not a flaw.
§3 — Fixed operating costs
What it takes to keep the doors open.
| Category | Low | Expected | High |
|---|---|---|---|
| Rent (2,000 SF) | $36,000 | $48,000 | $60,000 |
| Founder salary (ED) | $45,000 | $50,000 | $55,000 |
| Cook (1 FTE) | $36,000 | $40,000 | $44,000 |
| Insurance (GL, property, WC) | $15,000 | $18,000 | $20,000 |
| Utilities + waste | $6,000 | $9,000 | $12,000 |
| POS, tech, subscriptions | $2,400 | $3,600 | $4,800 |
| Marketing + outreach | $3,000 | $5,000 | $8,000 |
| Maintenance + supplies | $3,600 | $6,000 | $8,400 |
| Bookkeeping + admin | $3,000 | $4,400 | $6,000 |
| Misc / contingency | $6,000 | $6,000 | $9,800 |
| Total annual fixed costs | $156,000 | $190,000 | $228,000 |
| Monthly | $13,000 | $15,833 | $19,000 |
Daily breakeven (baseline): fixed costs are ~$609/day. Baseline earned contribution margin is ~$465/day. The ~$144/day gap is what grants and donations cover at baseline — and what rising café traffic closes over time.
§4 — Three-scenario model (canonical view)
Single source of truth.
| Earned activity | Conservative | Baseline | Optimistic |
|---|---|---|---|
| Café gross profit | $40,435 | $76,050 | $120,407 |
| Farm stand gross profit | $14,477 | $33,977 | $61,152 |
| Events (net contribution) | $10,980 | $34,890 | $58,800 |
| Contribution margin | $65,892 | $144,917 | $240,359 |
| Fixed costs | $156,000 | $190,000 | $228,000 |
| Net earned position | ($90,108) | ($45,083) | +$12,359 |
| Fixed-cost coverage (earned) | 42% | 76% | 105% |
Even in the conservative case, earned activity covers ~42% of operations — this is not a charity case. The single biggest lever is daily café transaction volume.
§5 — Sensitivity analysis
What moves the baseline gap of ($45,083)?
Biggest levers, in order: (1) café transaction volume — each additional daily regular ≈ ~$2,900/yr in gross profit; (2) farm-box subscriptions (a Phase 1B add that nearly closes the gap by itself); (3) event frequency; (4) COGS discipline (~$6K per 5 points).
§7 — Cash-flow sketch · Year 1 baseline
Rebuilt to include COGS.
Contribution-margin basis (revenue minus COGS, then minus fixed). Ramp-up: Month 1 at 50% of run-rate, Month 2 70%, Month 3 85%, Month 4+ 100%. Fixed costs ~$15,833/month throughout.
| Month | Contribution margin | Fixed | Net (before grants) | Cumulative |
|---|---|---|---|---|
| 1 (50%) | $6,038 | $15,833 | ($9,795) | ($9,795) |
| 2 (70%) | $8,453 | $15,833 | ($7,380) | ($17,175) |
| 3 (85%) | $10,265 | $15,833 | ($5,568) | ($22,743) |
| 4–11 (100%) | $12,076 /mo | $15,833 /mo | ($3,757) /mo | … |
| 12 (100%) | $12,076 | $15,833 | ($3,757) | ($56,556) |
| Year 1 | $133,007 | $190,000 | ($56,556) | ($56,556) |
Reality check: at baseline, earned activity runs a ~$56.6K deficit in Year 1 before grants/donations (deeper than the steady-state $45K because of the ramp). This is exactly why the plan carries $30–50K working capital in startup and $45–75K in Year-1 grants in the capitalization strategy — together they cover the gap. Monthly burn shrinks to ~$3,800 by Month 4; the path to breakeven is the optimistic run-rate (Year 2–3).
§8 — Assumptions & validation status
What to validate in Phase A.
| Assumption | Value | Confidence | How to validate |
|---|---|---|---|
| Café avg ticket | $15 | Medium | Survey comparable Monterey cafés |
| Café daily transactions | 25 | Medium | Foot-traffic counts; SBDC consult |
| COGS % | 35% | Low | Real pricing from 2–3 Salinas Valley farms; test-menu costing |
| Farm stand basket | $22 | Medium | Benchmark Ecology Center, markets |
| Farm stand daily customers | 15 | Low | Foot-traffic data at target sites |
| Rent (2,000 SF) | $4,000/mo | Medium | 3+ Seaside/Marina broker quotes |
| Insurance | $18,000/yr | Medium | Commercial broker quotes |
| Event attendance | 30–40 | Low | Run 1–2 SD pop-ups |
| Operating days/month | 26 | High (decided) | Non-negotiable admin day |
| Cook salary | $40,000 | Medium | Monterey wage data |
| Ramp-up period | 3 months | Medium | Industry standard; adjust for pre-open buzz |
Validate the two "Low" assumptions first — COGS % and farm-stand traffic move the model the most, and both are resolvable with Monterey County fieldwork. Moving each from estimate to validated is the core Phase A financial deliverable.
Model basis: 26 operating days/month (312/year), consistent across all streams. Contribution-margin method throughout. Planning estimates pending Phase A validation, not audited projections.