Enterprise unit economics — worksheet methodology (two-site smart farm)¶
Purpose¶
Provide a repeatable worksheet pattern and pass/fail tests for comparing candidate enterprises on the same land and labor envelope—without a single committed mix. Outputs feed CAPEX, OPEX, and enterprise sequencing — two-site constraint, Farm accounting baseline, Revenue milestone model, and Execution gates — financial thresholds.
Non-goals: Picking “the” enterprise here; publishing dollar forecasts without evidence.
Required inputs (gather before treating any row as “true”)¶
| Input | Description | Typical source |
|---|---|---|
| Enterprise list | Named candidates with primary product and exit channel | Enterprise options analysis |
| Unit definition | What one “unit” is (head, lb sold, bed-night, acre rotation, etc.) | Owner definition; stable year to year |
| Time horizon | Planning years | Plan phases |
| Split-site parameters | COMMUTE_ONE_WAY, batching, SITE_HOME vs SITE_FARM tasks |
Two-site operations model |
| Family labor envelope | Hours/week by role; surge windows | Labor model |
| Shadow labor rate band | SHADOW_LOW–SHADOW_HIGH $/hr |
Family policy—not tax reporting |
| Automation posture | Manual baseline vs instrumented | Instrumentation ROI model |
| Evidence hooks | UT budgets, auction bills, processor quotes | Source-ingest campaign |
Minimum viable contribution margin (MVCM) gate tests¶
Contribution margin per enterprise (cash basis for planning year):
CM_X = P_X − V_X
where P_X = revenue per unit, V_X = variable costs per unit (see accounting baseline—no full overhead allocation here).
Pass/fail rules (placeholders—fill before scale)¶
| Test ID | Rule | Pass | Fail (do not scale enterprise X) |
|---|---|---|---|
| MVCM-1 | Positive unit margin | CM_X > 0 at mid price in [P_LOW, P_HIGH] |
CM_X ≤ 0 at mid price—fix channel or cut scope |
| MVCM-2 | Sensitivity | CM_X > 0 at P_LOW or documented hedge (contract) |
Negative at P_LOW and no hedge—high optimism risk |
| MVCM-3 | Blended scenario | For active scenario S, weighted CM_S = Σ w_X CM_X > 0 |
Blended ≤ 0—Fin-G(2→3) blocked until remediated |
Formula (blended):
CM_S = Σ_X w_X × CM_X with Σ w_X = 1 (revenue weights or unit mix—document convention).
Split-site logistics burden rules¶
Incremental split-site cost for enterprise X (not allocated overhead—incremental only):
Δ_OPEX_SPLIT_X = (trips_X × 2 × COMMUTE_MI × $/mi) + time_trips_X × σ + cold_chain_X + duplicate_gear_X
| Symbol | Meaning |
|---|---|
COMMUTE_MI |
One-way miles—or use minutes × speed assumption—document |
σ |
Shadow $/hr for drive time—use band |
trips_X |
Trips attributable to X per planning year |
Burden ratio (gate):
R_SPLIT_X = Δ_OPEX_SPLIT_X / max(CM_X × units_X, ε)
| Rule | Pass | Fail |
|---|---|---|
| SPLIT-1 | R_SPLIT_X ≤ R_SPLIT_MAX (placeholder) |
Logistics eats margin—consolidate trips, hire custom, or defer enterprise |
| SPLIT-2 | Haul + processing in V_X or Δ_OPEX_SPLIT—not both double-counted |
Worksheet error |
Consolidation: If same trip serves multiple enterprises, allocate trips_X by documented rule (e.g. by revenue).
Labor-cost treatment (family + hired + telemetry triage)¶
Categories¶
| Category | Symbol | Notes |
|---|---|---|
| Family field + handling | H_FAM_X |
Hours/unit—normal week |
| Surge | H_SURGE_X |
Worst window (calving, weather, market rush) |
| Hired | H_HIRED_X |
Cash cost in V_X or overhead—one place |
| Telemetry / IT triage | H_TRIAGE_X |
Alerts, false positives, patching, dashboard—first-class |
Full labor charge (for M3 milestone)¶
L_CHRG_Y = (H_FAM_Y + H_SURGE_Y + H_TRIAGE_Y) × σ with σ ∈ [SHADOW_LOW, SHADOW_HIGH]
Not tax W-2—opportunity cost for go/no-go.
Low-labor optimization metric¶
Λ_X = CM_X × units_X / (H_FAM_X + H_SURGE_X + H_TRIAGE_X) = contribution margin per combined hour
Rank enterprises by Λ_X under normal and surge—two columns minimum.
Telemetry triage rule¶
| Condition | Action |
|---|---|
H_TRIAGE_X > H_TRIAGE_MAX per week sustained |
De-scope sensors—Instrumentation ROI |
| False positive rate unbounded | Fail automation scale gate—not a finance pass on labor |
Outputs this worksheet supports¶
| Output | Consumer |
|---|---|
| CM_X, MVCM tests | Fin-G(1→2), Fin-G(2→3) |
| Cash timing | Working capital; capital phasing |
| Labor hours per unit | Surge feasibility; M3 |
| Split-site OPEX | R_SPLIT gate; CAPEX/OPEX sequencing |
| Scenario branches | S1/S2 parallel rows |
Assumptions (explicit)¶
| Assumption | Why it matters |
|---|---|
| Contribution margin first | Full overhead allocation to one enterprise often lies—use ranges |
| Family labor has opportunity cost | Shadow rate band for comparability |
| Automation is two-sided | CAPEX + subs + triage hours |
| Two sites duplicate or inflate cost | Same enterprise: different CM if logistics differ |
| ≥ two scenarios until validation closes fork |
Placeholders until real numbers exist¶
| Placeholder | Meaning |
|---|---|
U_X |
Physical unit for enterprise X |
P_X, P_LOW, P_HIGH |
Price per unit |
V_X |
Variable cash costs per unit |
H_FAM_X, H_SURGE_X, H_TRIAGE_X |
Hours |
D_MI |
Delivery miles / trips per unit |
CM_X |
P_X − V_X |
R_SPLIT_MAX, H_TRIAGE_MAX |
Policy ceilings |
ε |
Small positive to avoid divide-by-zero |
Worksheet A — Unit definition and channel¶
| Enterprise ID | Name | Primary unit U_ |
Primary exit channel | Notes |
|---|---|---|---|---|
| E1 | ||||
| E2 |
Worksheet B — Variable costs per unit (cash)¶
| Line | E1 | E2 |
|---|---|---|
| Purchased inputs | ||
| Veterinary / health | ||
| Marketing / commissions | ||
| Haul / transport | ||
| Processing fees | ||
Variable subtotal V_X |
Worksheet C — Split-site logistics load per unit¶
| Line | E1 | E2 |
|---|---|---|
| Trips per unit | ||
Δ_OPEX_SPLIT |
||
R_SPLIT |
Worksheet D — Labor per unit¶
| Line | E1 | E2 |
|---|---|---|
| Family field | ||
| Admin / sales | ||
| Hired | ||
| Telemetry triage |
Worksheet E — Scenario matrix¶
| Scenario | w_E1 | w_E2 | CM_S | Peak cash month | Binding labor |
|---|---|---|---|---|---|
| S1 | |||||
| S2 |
Git-oriented practice¶
Version assumptions in changelog subsection or commit messages; date external spreadsheets.