Module 3 · Lesson 3
Fixed Cost Structure and Operating Margin
Why the ratio of fixed to variable costs determines how much shock a household can absorb.
Full Access material
Fixed Cost Structure and Operating Margin is part of Full Access
Why the ratio of fixed to variable costs determines how much shock a household can absorb.
- What you produce
- Design and stabilise the recurring cash flow that funds every other WDF activity.
Educational material only. Nothing here is investment, tax or legal advice.
Reflection question
If your income doubled, which of your current fixed costs would you deliberately choose to increase, and why?
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How this applies by framework phase
The same material reads differently depending on what your capital needs to do next. You may be in more than one phase at a time.
- Capital Building
- Read this as a question about direction: which surplus, which income stream, and which asset should the next dollar move toward — and what would make that move durable rather than opportunistic?
- Capital Conversion
- Read this as a question about productivity: what is the capital you already own currently doing, what cash flow could it support, and what drag, liquidity or liability constraint has to be handled before it can do more?
- Capital Preservation
- Read this as a question about durability: what could force a sale at the wrong time, how much liquidity keeps that from happening, and how is purchasing power protected without abandoning growth entirely?