The Unboring CFO

The Unboring CFO

This is you.

You are an education business owner with $500k or more in annual revenue.

You want more money in your pocket.

But reality looks different.

What would help you achieve better profit?

Numbers.

Yeah, you need to look deeper into numbers.

And maybe you’ll hear what they’re trying to tell you.

Numbers don’t lie.

Numbers help you choose the best path to profit.

So why not use them?

You don’t know where to start?

Start with analyzing Unit Economics.

Unit economics means analyzing a single average customer: how much revenue they generate and how much it costs to serve them.

That helps you understand the basic building blocks of your business and how they contribute on a larger scale.

Each unit or customer is like a steak.

The fat part is costs directly related to that specific customer.

The meat represents the profit we earn after covering costs.

More costs, less gross profit.

Less costs, more gross profit.

The size of the steak depends on how much the customer usually pays you.

If an average customer pays little, your steak stays small.

If an average customer pays a lot, your steak is big.

Now you’re ready to dig into the numbers.

Let’s imagine Stickman owns a math school.

Step 1 of unit analysis: figure out how much the average customer pays you.

Divide Stickman’s $12,000 in sales from last month by the 20 customers he had. That gives an average of $600 per customer.

Step 2: Identify the costs involved.

But not just any costs—we need to focus on variable costs.

Variable costs increase as you gain more customers.

And they decrease when you have fewer customers.

Fixed costs, on the other hand, stay the same whether you have 0 customers or 1,000.

Now, let’s identify the variable costs.

Here’s a breakdown of Stickman’s variable costs per customer, totaling $370.

Step 3: Calculate the gross profit per customer using the given formula.

Stickman earns $230 gross profit from each customer!

But that’s not all! Fixed costs will take a bite out of our gross profit too.

Here’s a breakdown of Stickman’s fixed costs for the math school, totaling $3,170.

Let’s see how the gross profit from one unit can contribute to covering fixed costs.

We’ve partially covered the fixed costs, but there’s still $2,900 left to go. We need more units to make up the difference!

Step 4: Calculate how many sales are needed to break even using the given formula.

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