Paton Hall

Paton Hall — Financial Model

Status: Planning model, not an audited forecast. Every figure is an assumption published for inspection. Compiled: 2026-08-11 Horizon: 12 months, matching the one-year lease (PH-052). Month 12 is a renewal decision, not a waypoint. Site: costed at 4 Breadalbane, the preferred site. The model is not specific to it — see §8.4. Companion to: 00-repository.md

1. The shape of the thing, in four lines

  • Fixed monthly cost: $4,500, inside the $5,000 ceiling.
  • Membership break-even: 51 members.
  • One part-time employee becomes affordable at roughly $7,750/month of revenue.
  • Two become affordable at roughly $10,500/month.

Everything below is the arithmetic behind those four numbers, plus the one place the model gets uncomfortable (§6).

2. Cost base

Line Monthly Annual Note
Rent $2,500 $30,000 Assumed gross. See §8.1 if TMI is extra.
Utilities — hydro, gas, water $600 $7,200 1927 uninsulated garage, winter-weighted. Least reliable figure here.
Insurance — CGL, contents, public assembly $350 $4,200 Planning figure. Must be confirmed against real quotes.
Internet — business fibre $150 $1,800
Maintenance, cleaning, consumables $300 $3,600 Includes coffee, markers, shop supplies.
Software and admin $150 $1,800 Membership platform, bookkeeping, domain, payments.
Repairs and contingency reserve $450 $5,400 10% of the above. A century-old building earns this line.
Total $4,500 $54,000 $500/month of headroom against the $5,000 ceiling.

Not in this table, deliberately: staff (§5), bench capital (§7), and any leasehold improvement. Operating cost and investment are kept separate so neither hides inside the other.

3. Revenue architecture

Five streams. The first one carries the building; the rest buy the future.

# Stream Role
1 Memberships Covers operating cost. Non-negotiable foundation.
2 Learning days and seminars Ticketed for non-members. Funnel and margin.
3 Certified training (EPTAC / IPC) The industry revenue. Gated on PH-032.
4 Space rental Member-led and external events. Uses idle hours.
5 Corporate patrons A firm underwrites a monthly slot for hiring access and named seats in each training cohort.

Not modelled, on purpose: any revenue from member ventures or investment access. Paton Hall takes no fee, commission or carry (PH-029). That line is worth zero here, correctly.

4. Memberships and break-even

4.1 Tier mix and blended ARPU

Tier Price Share of members Contribution to ARPU
Bench $50 50% $25.00
Shop $100 35% $35.00
Keyholder $200 15% $30.00
Blended ARPU $90.00

4.2 Break-even

$4,500 ÷ $90 = 50 members. At the actual integer mix:

Tier Members Revenue
Bench @ $50 26 $1,300
Shop @ $100 18 $1,800
Keyholder @ $200 7 $1,400
Total 51 $4,500

Fifty-one members covers rent, heat, light, insurance, internet, supplies and contingency, with no events, no training and no sponsors. That is the whole argument in a single number: the Hall's fixed cost is rent, not a machine fleet.

4.3 Sensitivity of break-even

If… Break-even becomes
Utilities run $1,000 not $600 56 members
Lease is net and TMI adds $700/mo 59 members
Both of the above 64 members
ARPU comes in at $80 (thinner Keyholder tier) 57 members
Rent-free first month negotiated unchanged, but adds $2,500 to launch float

Even the pessimistic corner, 64 members, is modest for a city with Hamilton's industrial population. That is the model's strength, and it needs no dressing up.

5. The staffing ladder

Assumption: one part-time role at 20 hrs/week, $25/hour, plus roughly 12% statutory burden (CPP, EI, EHT, WSIB, vacation accrual).

20 hrs × 52 weeks ÷ 12 months = 86.7 hrs/month × $25 = $2,167 + burden ≈ $2,500/month all-in.

Rung Staffing Monthly cost Revenue to cover Prudent trigger (with 10% surplus)
1 Volunteer $4,500 $4,500 $5,000
2 One part-timer $7,000 $7,000 $7,750
3 Two part-timers $9,500 $9,500 $10,500

5.1 What has to fire to reach each rung

Rung 2 — one part-timer at $7,750/month. Memberships get you most of the way and cannot get you all of it.

Source Contribution
65 members @ $90 $5,850
Learning days, ~3/month $1,100
Space rental $600
Hosted training, annualised $720
Total $8,270

Comfortably clears $7,750. Memberships alone never reach Rung 2. At $90 ARPU it would take 78 members to fund a part-timer on memberships alone: achievable, but slower and more fragile than adding a second stream. Programming is what makes employment possible.

Rung 3 — two part-timers at $10,500/month. Requires certified training running as a real line rather than an occasional event.

Source Contribution
90 members @ $95 $8,550
Learning days, ~4/month $1,700
Space rental $1,000
Training, own bench + hosted $3,000
Corporate patrons ×2 $1,500
Total $15,750

Clears comfortably, with room for reserve and bench amortisation. Rung 3 is a training-revenue question, not a membership question. If EPTAC does not convert (PH-032), Rung 3 does not happen in year one, and the model says so.

6. Twelve-month scenarios

Member ramp assumptions, base case: 20 founding members pre-sold before doors open, then roughly 5/month tapering to 2/month.

Month 1 2 3 4 5 6 7 8 9 10 11 12
Members 26 32 37 42 46 50 54 57 60 62 64 65

Break-even is crossed in Month 6.

6.1 Year-one totals

Conservative Base Upside
Members at Month 12 40 65 90
Blended ARPU $85 $90 $95
Membership revenue $29,580 $53,550 $62,700
Learning days $4,800 $8,700 $13,200
Space rental $2,400 $4,500 $7,200
Certified training $2,160 $8,640 $20,000
Corporate patrons $0 $3,000 $10,000
Total revenue $38,940 $78,390 $113,100
Operating cost $54,000 $54,000 $54,000
Surplus before staff ($15,060) $24,390 $59,100
Staff cost in year $0 $10,000 (1 PT from M9) $35,000 (2 PT from M6)
Net year-one position ($15,060) $14,390 $24,100

Training assumptions: hosted cohorts of 8 students at roughly $900/seat, with the Hall taking a 30% host share (~$2,160 per cohort). Conservative assumes 1 cohort in the year; base assumes 4; upside assumes 8 with some own-delivered.

6.2 Where the model gets uncomfortable

The conservative case exits Month 12 at a positive run-rate but loses about $15,000 across the year.

That is the shape of every ramp rather than a flaw in the model. The Month-12 run-rate under conservative assumptions is roughly $4,650/month against $4,500 of cost, which sustains. But the first five months sit below break-even, and something has to pay for them.

The fix is structural and it is cheap: sell founding memberships before rent starts.

25 founding members × 6 months prepaid × $90 = $13,500.

That lands within a few hundred dollars of the conservative-case first-year gap, and matches the 3-month reserve target. Pre-selling the founding cohort is the single most important financial action available before Month 0, and it doubles as the seed community that solves the cold-start problem in 00-repository.md §10.

If the founding cohort cannot be sold before opening, that is real information about demand, delivered at the cheapest possible moment.

7. Capital — the bench cell

Not in the operating budget. Funded from surplus, patron sponsorship, or grant — never from operating float.

Indicative build for a demountable, teaching-grade bench cell (PH-033):

Item Cost
ESD benches ×2, knock-down frames $2,400
ESD matting, wrist straps, grounding $800
Inspection microscope (Mantis-class) $4,500
Soldering and hot-air stations ×3 $2,400
Portable fume extraction ×2 $1,800
Test gear — scope, PSU, meters $1,200
Camera and display rig $1,400
Consumables and tooling $600
Total $15,100

Notes that matter:

  • Every item is portable. Mats not flooring; portable extraction not ducted; knock-down frames. On a one-year lease this is not optional — it is what makes the investment defensible at all. The equipment survives the address (PH-053).
  • The camera and display rig earns its place. It converts one bench into a room-scale teaching instrument, so a single trainer demonstrates to a full seminar instead of four people crowding a scope.
  • Dual use is the justification. The bench serves members on build nights and trainers during certification. Neither use alone would justify the spend inside twelve months. Together they do.
  • Comparators (PH-034): a 20-station institutional lab runs $100,000–300,000+; funded mobile training labs run $500,000–1,200,000. This cell teaches the same standard at roughly 20–50× less.

8. Assumptions, stated so they can be attacked

8.1 The ones most likely to be wrong

  1. Rent is gross. If $2,500 is net and TMI adds $500–900/month, break-even moves to 56–61 members and the conservative case worsens by $6,000–11,000 across the year. Confirm before circulating any financial document.
  2. Utilities at $600. A 1927 uninsulated concrete-block garage through a Hamilton winter could run materially higher. The contingency line absorbs some of this; a $1,000 month does not break the model but does move break-even to 56.
  3. Insurance at $350. Public assembly, after-hours keyholder access, build nights and eventual soldering together sit outside a standard small-commercial policy. A placeholder until quoted.
  4. ARPU at $90. Depends on a healthy Shop tier. If the membership skews to Bench, ARPU falls toward $70 and break-even rises to 64.
  5. Training converts. All certified-training revenue is gated on PH-032 — EPTAC is in conversation, nothing signed. The base case survives its removal (falling to roughly $69,750 revenue, still funding one part-timer); the upside case does not.

8.2 Deliberately conservative choices

  • No revenue booked from member ventures, investment access, or referrals.
  • No grant income modelled, despite PH-009/PH-010 being live and relevant. Any Ontario Job Grant or SDF participation is upside, not plan.
  • Volunteer labour valued at zero, which understates the true cost base and is the honest way to present it.
  • No membership price increases across the twelve months.

8.4 The model is not specific to 4 Breadalbane

  • Rent at $2,500/month for roughly 2,000 sq ft is the input the whole cost base rests on. It is a market rate, not a one-off.
  • The requirement is modest and repeatable: 1,500–2,500 sq ft of open single-storey space, ground-level vehicle access, parking, three-phase power where available, at or under $2,500/month.
  • Other Hamilton properties are being actively scouted (PH-055). If 4 Breadalbane does not proceed, the cost base moves by the difference in rent and nothing else in this model changes.
  • Practical consequence: break-even moves roughly 1 member per $90/month of rent difference. A room at $3,000 needs 57 members instead of 51.

8.3 Reserve policy

  • Target: 3 months' operating cost = $13,500.
  • On a one-year lease the reserve doubles as the move fund. If renewal fails, it pays for relocation without an emergency appeal to members.
  • Base case reaches it by Month 12. Conservative case does not, which is the clearest argument for the founding-member float in §6.2.

9. What good looks like at Month 12

Not a revenue number. Four pieces of evidence:

  1. A membership that covers costs without events or training.
  2. At least one certified cohort delivered, with named students.
  3. At least one employer who paid — or successfully claimed a grant — for training at the Hall.
  4. Programming that runs on nights the organisers are not there.

A Hall with those four things and a lost lease is in a far better position than one with a renewed lease and none of them.

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