Kishen Patel
Kishen is an ICAEW Chartered Accountant and Corporate Finance Adviser. He founded Consult EFC to help UK startup founders master their unit economics and capital efficiency. He specialise in building investor-ready financial frameworks that turn messy growth into a scalable, defendable engine.
Table of Contents
You know the moment. You start hiring, ad spend creeps up, product work expands, and the monthly bills begin to look like a proper company. Revenue, though, has its own timetable. It arrives late, unevenly, and often with strings attached (refunds, chargebacks, onboarding time, support load).
That’s how a startup can “grow” and still feel broke.
This is where unit economics stops being a slide in a pitch deck and becomes survival. In plain English, unit economics is what you make or lose per customer, per order, or per subscription after the direct costs of serving them. If the maths works at the unit level, scaling can work. If it doesn’t, scaling just makes the problem bigger, faster.
In 2026, investors are still backing strong businesses, but they’re less forgiving about vague payback stories and loose runway management. A Fractional CFO for startups can help you prove that growth pays back, spot where losses hide, and stop you spending your next £1m building a bigger leak.
Managing your runway is critical, but understanding your liquidation preferences is what determines if you actually see a payout at exit.
Free Unit Economics Audit
Before you spend your next £1m on growth, spend 30 minutes with Kishen Patel to verify your LTV to CAC ratios and pressure-test your cash runway.
Confidential strategy session for high-growth UK founders. We prioritise capital efficiency.
Unit economics that scale are simple, until you start adding real-world costs
Unit economics often looks healthy because founders leave out messy costs that don’t fit neatly in a model. The first pass usually includes direct production costs and maybe some marketing. Then reality turns up: fulfilment, payment fees, customer support, refunds, failed deliveries, implementation time, and churn.
It helps to separate two ideas:
- Contribution margin per unit: what’s left after the direct costs to deliver one sale or one customer month.
- Overall profit: contribution margin minus the fixed costs of running the company (salaries, rent, tooling, senior hires, insurance).
A quick example makes this clear. Say you sell a £100 product.
- £65 goes on direct costs (goods, fulfilment, packaging, payment fees).
- £20 goes on marketing to get the order (blended across your ads and promos).
You have £15 contribution margin left. That £15 has to cover support time, refunds, and then your fixed overheads. If the real direct cost is £72 once you include returns, or your marketing cost rises to £28 as channels saturate, your margin is gone.
Scaling doesn’t fix this. Scaling amplifies whatever is true at the unit level. If you make £15 per order, more orders helps. If you lose £5 per order once you count the true costs, more orders just burn cash faster.
The small set of numbers that tell you if growth is healthy
You don’t need a finance team to start tracking the right metrics. You do need clear definitions and consistency. The numbers that matter most tend to be:
- CAC (Customer Acquisition Cost): total sales and marketing spend divided by new customers (track by channel).
- LTV (Lifetime Value): gross profit you expect to earn from a customer over their lifetime, not revenue.
- LTV:CAC: a simple health check of whether acquisition is worth it.
- Payback period: how many months it takes to recover CAC from gross profit.
- Gross margin: what’s left after cost of service (hosting, support, fulfilment, payment fees).
- Churn and retention: how many customers you lose and how much revenue you retain.
Rules of thumb still work as a starting point, but 2026 expectations have tightened around efficiency. In many SaaS contexts, LTV:CAC of 3 to 5 is common, with 4:1 often viewed as healthy. Payback under 12 months is a baseline target for many subscription models, and under 6 months is strong if the churn profile is stable. Gross margin expectations vary by model, software often targets 75 percent plus, while physical goods businesses are often far lower and need tighter control elsewhere.
Track these by segment, not just as one company-wide average. One bad cohort can hide inside a good overall number for months.
| Metric | Healthy starting point (often used in 2026) | Why it matters |
|---|---|---|
| LTV:CAC | 3:1 to 5:1 (4:1 often “healthy”) | Shows whether spend creates value |
| Payback period | Under 12 months (under 6 is strong) | Protects cash and runway |
| SaaS gross margin | 75%+ (often mid to high 70s) | Funds growth and product work |
| Retention (B2B SaaS) | GRR often targeted 85% to 95% | Signals product fit and support load |
Why averages lie, segmenting saves you
Averages can be comforting and dangerous. A blended CAC might look fine, but only because one cheap channel hides an expensive one. A blended churn rate might look steady, but only because your best customers mask the churn in newer cohorts.
Common places where the “average” lies:
Paid search customers may convert quickly, then churn faster because they were price-shopping. Enterprise deals might look huge on the top line, then cost a fortune in implementation time, custom work, and senior support. Discounted cohorts might hit targets in the month, then never repay the acquisition cost.
Segmentation doesn’t need to be complex. Start with three cuts that most teams can handle without fancy tools:
- Acquisition channel (paid search, paid social, referrals, partnerships, outbound).
- Customer size (solo, SME, mid-market, enterprise, or a simple proxy like seats).
- Plan or product SKU (your main pricing tiers, or product categories).
Once you do this, unit economics turns from an argument into a map. You can see where to spend, what to pause, and what to fix before you scale.
Before you spend £1m, pressure-test the engine with a ‘what if’ plan
The question isn’t “can we grow?” Most startups can grow by spending more. The real question is “can we grow without running out of cash?”
In 2026, capital efficiency is not a buzzword, it’s how investors sort strong businesses from expensive ones. They look for proof that growth pays back in a reasonable period, and that you can control burn if conditions change. That means you need a plan that survives real-world shocks: CAC rising, conversion rates wobbling, refunds spiking, or churn creeping up when you hire a sales team.
A good ‘what if’ plan isn’t a 30-tab spreadsheet. It’s a set of scenarios that answer: if we push the growth pedal, what happens to runway, and when do we see the return?
Build it with numbers you can explain in one minute:
- New customers per month by channel
- CAC and expected payback
- Gross margin and support cost assumptions
- Hiring plan and fixed costs
- Cash runway under base, upside, and downside cases
This is where a fractional cfo for startups earns their keep. They don’t just model growth. They tie growth to cash timing, risk, and decision points.
Build a cash view you can trust, then link it to unit economics
If you only do one thing, build a 13-week cash forecast. Make it simple and updated weekly. Pair it with a rolling monthly forecast that stretches 12 to 18 months ahead. This gives you two views: near-term truth and longer-term direction.
Then link cash to unit economics. If your payback is 9 months, aggressive growth means you’ll fund nine months of acquisition before it returns. That’s not bad, but it must be planned. Growth often needs working capital before it produces surplus cash.
Watch for common errors that make forecasts look safer than they are:
VAT timing catches teams out, especially when sales rise quickly. Annual prepay helps cash, but it can be seasonal and it can reverse if churn rises at renewal. Collections matter too. A signed contract is not cash in the bank if payment terms are 30 to 60 days and the customer pays late.
Runway is more than a number. It’s how long you can keep making good choices. Many teams aim for 18 months plus when possible, because it gives room for mistakes and slower fundraising cycles.
Decide what to fund next: hires, marketing, pricing, or product fixes
Spending decisions get easier when you tie them to the constraint in your unit economics.
If CAC is rising, don’t just spend more to hit volume. Look at conversion rates, channel mix, creative fatigue, and sales cycle length. If churn is high, pushing more money into acquisition is like pouring water into a bucket with holes. Fix onboarding, product gaps, customer success coverage, and the promise you make in marketing.
If margins are thin, you need to act at the source. That can mean renegotiating suppliers, reducing returns, changing packaging, adjusting fulfilment methods, or tightening fraud checks. If value is strong and retention is stable, pricing is often the fastest route to better unit economics. A small price rise on new cohorts can fund growth without adding risk.
Sensitivity checks keep you honest. Try two or three shocks:
- CAC up 30 percent
- Churn up 1 percentage point
- Gross margin down 5 points
If any one of these wipes out runway, you don’t have a scalable engine yet. You have a fragile one.
What a Fractional CFO does that your bookkeeping and spreadsheets won’t
Bookkeeping records what happened. Spreadsheets guess what might happen. CFO work turns both into decisions with clear trade-offs.
A fractional cfo for startups gives you senior financial thinking without the cost and risk of a full-time hire too early. That matters most before a major spend ramp, because once cash is gone, your options narrow fast.
This isn’t about fancy reporting. It’s about speed and clarity. Founders need answers they can use this week: which channel is paying back, which cohort is drifting, whether to hire now or in eight weeks, and what happens if a key assumption breaks.
The best time to bring in financial leadership is when it can still change the outcome, not when it can only document the damage.
Turn messy data into decisions you can act on each week
Most startups don’t have a data problem, they have a definition problem. Marketing reports one CAC, sales reports another, and finance has a third number that includes different costs. Teams waste time arguing instead of acting.
A fractional CFO sets up a tight cadence:
- A fast monthly close that’s accurate enough to trust
- A small KPI pack, tracked the same way every time
- Unit economics by segment, not just blended totals
Practical outputs tend to include a channel scorecard that shows CAC, payback, and volume side by side. A cohort view that shows retention over time, not just “this month churn”. A contribution margin view per product or plan, including support and fulfilment where possible. Often there’s also a clear “stop doing” list, based on numbers, not opinion.
This is how you get out of the fog. The goal is not more analysis. The goal is fewer surprises.
Protect the £1m by setting guardrails, controls, and a spending plan
Big spends fail in small ways first. A few extra tools, a couple of contractors, higher ad bids, and a hire made “to move faster”. Quiet burn adds up, and it rarely shows up in one obvious line.
Guardrails make spending safer without slowing the business to a crawl:
Approval limits stop accidental commitments. A hiring plan tied to revenue or retention milestones keeps headcount aligned to what the business can carry. Budget ownership makes managers accountable for the costs they influence.
Investor readiness matters too, even if you’re not fundraising today. Clean accounts, a sensible chart of accounts, and consistent metric definitions reduce due diligence pain later. It also makes board conversations calmer because you’re debating decisions, not debating what the numbers mean.
Fractional engagements are built for reality. You can scale support up during fundraising, pricing changes, or a major go-to-market shift, then scale it down when the engine is running smoothly.
Signs you need a fractional CFO now, not later
Founders often wait until finance feels painful. The better trigger is simpler: the moment your spend is about to outpace your certainty.
If you’re planning to deploy serious money into hiring or acquisition, and you can’t clearly explain payback and runway under a downside case, you’re taking a bigger risk than you think.
A fractional cfo for startups gives you an earlier warning system and a calmer way to decide. It’s not about fear. It’s about control.
Red flags that usually show up right before a cash crunch
These are patterns that often appear in the months before cash gets tight:
- You can’t explain CAC by channel, and you don’t trust the number.
- Payback period is unknown, or it changes every time someone rebuilds the sheet.
- Churn isn’t measured properly, or retention is only checked when it’s already bad.
- Gross margin swings month to month, and no one can say why.
- The cash forecast changes wildly, with no clear link to drivers.
- Sales pipeline numbers and finance numbers don’t match.
- Discounts are rising just to hit targets, and nobody tracks the long-term cost.
- New hires are planned without a model that shows runway impact.
- Runway is under 12 months, and decisions are still being made on gut feel.
- Leadership disagrees on what “good” looks like for unit economics.
If more than two of these feel familiar, you don’t need more hustle. You need clearer numbers and tighter decisions.
Good timing points: fundraising, new pricing, new market, or a step-change in spend
There are moments when financial leadership pays back quickly, even if the business feels healthy.
Fundraising is the obvious one. Investors want a story backed by driver-based numbers: retention, payback, gross margin, burn, and a credible plan to turn spend into return. Pricing and packaging changes are another. A small change can lift contribution margin across every future customer, but only if you track cohorts properly.
Entering a new geography, launching a new channel, or moving from founder-led sales to a team also changes your cost base and your risk. These are all points where unit economics can shift without you noticing until cash is already committed.
Bringing in a fractional CFO at these moments helps make growth repeatable and measurable, rather than hopeful.
How Consult EFC can help
Spend doesn’t create scale. Unit economics creates scale, spend just speeds it up. Before you commit your next £1m, make sure your contribution margin is real, your payback is proven by segment, and your cash forecast reflects timing, not wishful thinking.
If you want a clear view of what’s working, what’s leaking, and what to fund next, Consult EFC can support with fractional CFO work and a practical unit economics review. The goal is simple: growth you can afford, and numbers you can defend.
Free Unit Economics Audit
Before you spend your next £1m on growth, spend 30 minutes with Kishen Patel to verify your LTV to CAC ratios and pressure-test your cash runway.
Confidential strategy session for high-growth UK founders. We prioritise capital efficiency.
