Budget
This page sets out how the £250k seed is used, and the expected operating budget once the CIC is self-sustaining. About half of the seed (£125,000) funds the first operating year. A further £100,000 is held as a reserve so that we can continue to support existing clients when new work is slow.
Phase One: the £250,000 seed
Seed allocation
| Item | Amount |
|---|---|
| Year-one operating costs (see below) | £125,000 |
| Foundational reserve — held so that we can continue to support existing clients when new work is slow | £100,000 |
| Capital equipment and one-off setup — certifications, incorporation, initial tools and equipment | £15,000 |
| Contingency (5%) | £10,000 |
| Total seed | £250,000 |
Year-one operating costs: £125,000
In the first year the three founding directors work part-time, moving to full-time as project income allows. Associates are paid per project and are not employees.
| Item | Annual |
|---|---|
| Three founding directors, part-time (averaging about 50% of full-time across the three during Phase One) | £75,000 |
| Associates — specialist time paid per project | £20,000 |
| Premises | £6,000 |
| Insurance — professional indemnity, public liability, employer’s | £6,000 |
| Software tools, hosting and other technical costs | £6,000 |
| Accountancy, legal, and CIC reporting | £6,000 |
| Finding new work — travel, events and meetings with prospective clients | £3,000 |
| Cyber Essentials Plus certification (annual) | £3,000 |
| Total year-one operating | £125,000 |
Capital equipment and one-off setup: £15,000
| Item | Amount |
|---|---|
| Initial computer equipment — workstations, networking, and a computer able to run artificial intelligence models on our own premises | £9,000 |
| Initial Cyber Essentials Plus certification (one-off setup cost) | £2,500 |
| CIC formation, legal, and contracting templates | £3,500 |
| Total capital and setup | £15,000 |
Foundational reserve: £100,000
The foundational reserve is the second-largest allocation in the seed, after year-one operating costs. It is not spent on day-to-day running costs; it is drawn on only when it is needed to support an existing client. Its purpose is to make sure we can keep supporting the systems we have built in months when there is little new project income.
A risk with any small software supplier is that it runs out of money while clients still depend on it for support, leaving those clients with systems that no one can maintain. The reserve is ringfenced for support, so our support commitments do not depend on monthly cash flow.
Once the CIC is self-sustaining, any amount drawn from the reserve is replaced from operating margin, and the reserve is kept at the level needed to meet every active support commitment. The conditions for drawing on it and the rules for replenishing it are written down and included in our annual reporting.
Phase Two: self-sustaining steady state
There is no second funding round in Phase Two. Clients are charged the cost of the work plus an operating margin. The fees cover operating costs, and the margin maintains the reserve and pays for staff development and tools.
The indicative operating budget once the CIC is self-sustaining, assuming the three founding directors work full-time and spending on associates rises with the amount of project work:
| Item | Annual (steady state) |
|---|---|
| Three founding directors, full-time, plus employer’s National Insurance and pension | £240,000 |
| Associates (rises and falls with project income) | £80,000–£200,000 |
| Premises and operational base | £10,000 |
| Insurance — professional indemnity, public liability, employer’s, at higher levels of cover | £9,000 |
| Software tools, hosting and other technical costs | £10,000 |
| Accountancy, legal, governance, CIC reporting | £10,000 |
| Certifications — Cyber Essentials Plus, and ISO 27001, the international information security standard (a Phase Two target) | £8,000 |
| Business development and events | £5,000 |
| Staff development — tools, certifications, conferences | £15,000 |
| Indicative steady-state operating | £385,000–£505,000 |
With fees set at cost plus an operating margin, project income of £480,000–£630,000 a year covers this budget and replenishes the reserve. That is roughly six to ten medium-sized projects a year, or a mix of small and medium projects adding up to the same amount.
How the reserve interacts with the operating budget
Two rules apply to the reserve:
- The reserve is used only for support. If the CIC has fewer projects in a quarter and operating cash is short, we reduce associate work and optional spending. We do not use the reserve for running costs; it is kept for supporting existing clients.
- Operating margin replenishes the reserve. Operating margin is paid into the reserve until the reserve reaches the level needed to cover every active support commitment. After that, further margin can be spent on staff development and other investment in the CIC.
Annual CIC reporting includes the state of the reserve, the support commitments it covers, and any draws made against it during the year.