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Key Takeaways
- Launching the mediation and negotiation consultancy requires a minimum initial capital expenditure (CAPEX) of $68,000 to cover setup costs for IT and office space.
- Profitability relies heavily on securing high-value Corporate Packages ($350/hour) to support a high 72% contribution margin against substantial Year 1 fixed overhead.
- The operational plan targets achieving breakeven within six months (June 2026) by rapidly acquiring clients to cover fixed operating expenses.
- The financial model projects viability with an EBITDA of $83,000 by 2026, contingent upon maintaining utilization rates and controlling Customer Acquisition Cost (CAC) below $500.
Step 1 : Define Service Offerings and Target Markets
Segment Focus
Your revenue mix dictates everything, from staffing needs to marketing spend. We're banking that 70% of your activity will be the standard Hourly Mediation service. This volume segment demands efficient processing and clear scheduling. The remaining 20% comes from the more involved Corporate Packages. Defining this split now locks in your initial value proposition for each distinct client type.
If you treat all clients the same, you'll overserve the small cases and underserve the big ones. It's important to know where your bread is buttered, financially speaking. You're setting the operational tempo right here.
Value Proposition Mapping
Map your value proposition directly to the expected volume share. For the 70% segment, focus on speed and accessibility, likely serving individuals and smaller commercial disputes. The value proposition centers on quick, confidential resolution.
For the 20% Corporate Packages, the value is specialized expertise and complex negotiation strategy, justifying the higher $350/hour rate mentioned later. This segmentation prevents feature creep across your service lines and helps you price correctly.
Step 2 : Establish Core Financial Metrics and Pricing
Set Core Rates
Pricing anchors your unit economics immediately. If rates don't support high gross margins, scaling the business just amplifies cash burn. You must set prices that cover direct delivery costs and leave substantial room for overhead absorption. This step validates the financial feasibility of the service mix you mapped out earlier.
Hit Margin Target
Set the Hourly Mediation rate at $250 and the Corporate Package rate at $350. To achieve the required 72% contribution margin (CM), your total variable costs must average 28% of revenue. Here’s the quick math: Based on the 70% hourly and 20% corporate mix, the weighted average realized rate is about $245 per hour equivalent. Defintely control direct costs so the variable cost per hour stays under $68.60 ($245 0.28).
Step 3 : Secure Initial Capital and Fund CAPEX
Capital Foundation
Funding the initial build-out is Step 3 for a reaosn: it stops you from stalling before you even open. You need $68,000 set aside right now for essential Capital Expenditures (CAPEX). This covers things like office furniture, essential IT infrastructure, and legal setup fees. Without this cash locked down, operations halt. That’s a hard stop.
More critical is the operating cash runway. You must fund operations until you hit the planned June 2026 breakeven date. If you don't cover the gap between spending and earning, the business dies from lack of air, not lack of demand.
Funding the Gap
Determine your total required raise by adding the $68,000 CAPEX to 6 months of projected negative cash flow. This buffer is your safety net. If you estimate fixed costs run about $23,000 per month (covering salaries, rent, insurance, and basic overhead), you need nearly $206,000 just to cover the first 6 months plus the setup costs.
Focus your pitch deck narrative on this specific need. Investors fund runway, not just furniture. Show them exactly how this capital bridges the gap until your $250/hour services start generating sustainable profit.
Step 4 : Formalize Legal Structure and Office Space
Legal Foundation
Formalizing the entity protects founders from personal liability when you start taking on client risk. Signing the lease locks in your first major fixed overhead commitment. These structural costs hit your cash runway immediately. You need to budget for these before revenue starts flowing.
For this consulting firm, the key is ensuring your professional liability insurance aligns with the scope of mediation services offered. This step moves you from planning to operational readiness, demanding immediate cash allocation.
Locking Down Overhead
Secure professional liability insurance right away. Budget $500 per month for this coverage; it handles claims arising from your advice or mediation process. This is non-negotiable for professional services.
Next, finalize the office lease. That $3,500 monthly rent must be factored into your operating cash runway calculation from Step 3. You must defintely calculate this fixed cost against your initial capital to see how many months you can operate before needing revenue. Aim for a lease term that matches your initial funding horizon.
Step 5 : Recruit Key Founding Team and Administrative Support
Staffing Capacity
Hiring your delivery team sets your capacity ceiling right now. You need 5 FTE Senior Mediators to handle case volume beyond what the Founder can manage alone. These experts cost $60,000 annually each. Also, 5 Administrative Assistants at $25,000 yearly keep the paperwork flowing smoothly. This team structure defines your initial operational burn rate. If you hire too fast, runway shrinks defintely fast.
The key here is matching mediator hiring to sales pipeline visibility. Hiring all 10 staff before securing consistent client flow means high fixed costs immediately. You must link these hires directly to projected revenue milestones from Step 7.
Payroll Cost Impact
Here’s the quick math on this staffing decision. The 5 mediators cost $300,000 annually (5 x $60k). The 5 assistants add $125,000. Total annual payroll hits $425,000, or about $35,417 per month in fixed salary expense. This is a big number for a new firm.
Since the target billing rate is $250/hour, and you aim for a 72% contribution margin, you need roughly 142 billable hours per month just to cover this payroll expense, ignoring all other overhead like rent and insurance. You need to ensure mediators are productive from day one.
Step 6 : Implement Targeted Marketing and Sales Funnel
Budget Discipline
Controlling acquisition cost is non-negotiable for reaching profitability on time. Your total annual marketing allocation is fixed at $25,000. This budget must support the hiring plan without requiring emergency capital raises before June 2026. If you overspend here, cash runway shortens fast.
This marketing spend must directly support the goal of landing enough clients to cover the $53,000 in monthly fixed payroll and rent. It’s a tight leash, but necessary for early-stage survival.
Hitting CAC Target
Spend the $25,000 budget on channels yielding high-quality leads, like targeted outreach to law firms. To maintain a CAC under $500, you need to secure at least 50 paying clients annually.
If you acquire exactly 50 clients this year, your marketing cost per customer is $500. Defintely prioritize channels that reach SMEs needing contract dispute resolution, since those higher-value corporate packages help absorb acquisition costs quicker.
Step 7 : Launch Services and Monitor Breakeven Progress
Launch & Track
Start operations immediately. You have a tight 6-month window to hit breakeven by June 2026, so rigorous tracking is paramount. Monitor your monthly cash flow against the fixed overhead required to keep the lights on. Your estimated monthly fixed costs, including $35,417 in salaries and $5,000 in facility costs, total roughly $41,500. If client onboarding takes longer than planned, that runway shrinks defintely.
Hit $57k Revenue
To cover $41,500 in fixed costs while maintaining your target 72% contribution margin, you must generate $57,639 in monthly revenue. This translates to needing about 212 billable hours per month across your team, assuming a blended rate near $272 per hour. Focus marketing spend to keep Customer Acquisition Cost (CAC) below $500 while driving utilization.
Mediation and Negotiation Consulting Investment Pitch Deck
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Frequently Asked Questions
Total initial CAPEX is $68,000, covering IT hardware ($15,000), office furniture ($20,000), and legal setup