FINANCE - CASE Scaling Readiness Diagnostic Assessment

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With a strategy for scaling, you are now in a position to assess the financial viability of your scale strategy. Here we focus on payers/funders.

Complete the six questions below and receive a customized report with your responses, potential areas of focus, and resources.

FUNDING GAP: Do you know how much funding you need now and in the future as you scale? Are you clear on who the payers/funders should be, and if they can provide the right mix of capital and terms that will allow you flexibility to scale?

BEGINNING: Lack of funding constrains current operations, so we haven't even thought about funding a scaling plan yet. LOW PROGRESS: We have adequate funding to fuel current operations, but we haven't assessed what additional funding we will need to pursue our scaling pathway(s). MEDIUM PROGRESS: We know how much capital we need to secure to pursue our scaling plans. We have started to identify payers/funders that may be aligned with that scaling plan. HIGH PROGRESS: We have sufficient funding streams to fuel both current operations and our scaling plan. We have proof of our payers'/funders' willingness to pay. Our funding streams are aligned with our scaling plan, including providing flexible capital.

UNIT ECONOMICS: Have you tested revenue and costs at the level of your scaling unit? Can you predict when you can get each unit to break-even, and then to a margin that is predictable and recurring?

BEGINNING: We haven't started the modeling that would lead us to a break-even prediction at the unit level. LOW PROGRESS: We have estimates and hypotheses about driving revenue at the unit level, and we are beginning to model how our costs will scale as revenues grow, but many of our critical assumptions are guesses. MEDIUM PROGRESS: We have modeled the time to get to break-even at the unit level and are on track to achieve this target. HIGH PROGRESS: We have already reached breakeven on at least one unit, and feel confident we can repeat this process with additional units.

COST EFFICIENCIES: Do you know how you can continue to find cost savings or become more efficient as you scale? Do you know where economies of scale (savings across units) may start to occur?

BEGINNING: We are not sure which types of costs might be reduced if we have enough units. LOW PROGRESS: We have ideas about economies of scale but have not been able to determine with any confidence if we are on track to benefit from them. MEDIUM PROGRESS: We have ideas about economies of scale and are on track to benefit from them. HIGH PROGRESS: We are benefitting from economies of scale that kick in at certain numbers of units or profitable/financially sustainable units.

EARNED REVENUE: Do you know what it takes to attract, convince, and close a deal with a payer (whether for a for-profit's sales cycle or a nonprofit's earned income strategy)? Are your revenue goals achievable without taking you off mission?

BEGINNING: We don’t know what it costs or how to efficiently go about getting and retaining new customers. We haven’t tracked this yet. LOW PROGRESS: We are starting to build the sales system for different customer segments and can pinpoint the questions we still need to answer for different segments. MEDIUM PROGRESS: We have knowledge about what it takes to close new sales, and are beginning to know what is predictable. We don't yet have sales or distribution partners to make sales more efficient and are not sure if our revenue goals are truly achievable. HIGH PROGRESS: We know what the sales cycle is, including the costs. We have put the right team in place to manage it effectively (either alone or with distribution or sales partnerships). We are confident that our revenue projections are realistic and will not pull us away from our mission. Alternatively, we are a non-profit that has assessed earned revenue and determined that it is not the right revenue model for us at this time given concerns about mission deviation, ability to pay, or other factors.

EXTERNAL CAPITAL: Do you know about the types of external capital (grants, equity, debt, etc) and how those would impact your scaling strategy? Have you explored innovative funding options such as results based financing, impact investing, oportunities through hybrid structuring, etc?

BEGINNING: We do not understand the various types of external capital or pros/cons of each that may be available for our business model and scaling goals. LOW PROGRESS: We understand the various types of external capital and have an initial understanding of pros/cons. However, we have not yet evaluated the best match for our model and therefore are currently only pursuing the external capital sources that are familiar to our team. MEDIUM PROGRESS: We have evaluated the various types of external capital and determined their appropriateness for our model. We have initial strategies in place to begin to pursue new forms of external capital to help us drive scale. HIGH PROGRESS: We have begun implementing strategies to pursue new sources of external capital as appropriate. We have explored innovative funding mechanisms and have either determined that they are not a fit for us or that they are and we have strategies in place to raise capital through them.

FINANCIAL SECURITY: Do you have diversified funding streams? Do you have the financial flexibility that can help weather downturns and make needed adaptations?

BEGINNING: Our day-to-day funding is still uncertain. We aren't thinking much past the next few months. LOW PROGRESS: We feel comfortable with the funding we have secured for the next year or two, but we haven't considered how unexpected changes in those funding sources could impact our financial security. MEDIUM PROGRESS: We have begun to diversify our funding, build stronger relationships with funders, and have a strategy for increasing flexible capital--but still have more to do to feel that we have the financial flexibility to make pivots. HIGH PROGRESS: We have diversified funding streams, flexible capital, and strong funder relationships that should help us weather downturns or unexpected events.