Map Your Cost Structure

List all fixed and variable costs, organized by function and strategic initiative. Understand where your money goes, what it enables, and how costs will evolve as you grow. Build flexibility into your cost model from the start.

Why it's Matters

A clear cost structure enables smarter decision-making, healthier burn management, and better investor conversations. Founders often know revenue goals but lack clarity on what it truly costs to operate — not just today, but as the business scales. Understanding your cost drivers is key to forecasting, prioritizing, and staying alive.

What You Need to Do

Break down your operating costs by category
Identify fixed vs. variable costs
Tie each cost line to a function or strategic goal
Align costs with current stage and growth model

How to Approach It

List all recurring and one-time costs across key categories:

People - salaries, contractors, equity dilution
Tools & Software - monthly/annual platforms
Marketing - paid ads, events, agencies
Sales & CS - tools, enablement, travel
Product & Development - cloud infrastructure, testing tools
General & Admin - legal, finance, insurance, office

Categorize by nature and impact:

Fixed vs. Variable: What scales linearly? What is steady regardless of growth?
Core vs. Discretionary: What’s essential? What can be paused or deferred?

Connect costs to strategic outcomes:

Don’t just list numbers but explain what each cost is enabling
For example: “This $4K/month contractor delivers feature X critical to ICP A”

Make the model modular:

Build in flexibility to model scenarios (team growth, GTM expansion, pricing changes)
Use a rolling 12-month cost projection + scenario toggles (conservative, base, aggressive)

Deliverables

Itemized cost structure spreadsheet (or table)
Cost allocation by function
Fixed vs. variable cost breakdown
Scenario planning inputs (growth levers vs. cost drivers)

How to Tell if You Got It Right

You know your burn rate and what drives it
Your team can justify key expenses with strategic logic
You can model how hiring, growth, or product shifts affect costs
Investors trust your numbers —not just your story

What to Watch Out For

Cost estimates that are disconnected from roadmap or GTM
Hidden costs from tool sprawl or unmanaged vendors
Underestimating hiring-related costs (ramp time, benefits, onboarding)
Failing to separate “must-have” from “nice-to-have”