The risks that decide the result
The main risk is revenue: the price a new brand can hold, and the project and B2B volume it can win. Cost, rent and liquidity matter, but less.
| Risk | The number that matters | Mitigation |
|---|---|---|
| Price level as a new brand | Prices −10%: recommended five-year NPV ($213,409) | Price test first; 10% maximum discount; review against Kitea every 6 months |
| Project and B2B volume | No B2B contracts: NPV incl. TV $177,032 (plan before improvements) | Sales and B2B lead from day one; first contract by month 8 |
| Materials and the cedi | Materials +20%: NPV incl. TV $333,582 (plan before improvements) | Boards by container; 30 days' supplier credit; reprice with board costs |
| Liquidity | Slow imports, no supplier credit, hotels at 60 days: about +$83,000 of working capital by year 5 | 50% deposits; stock policy; $80,000 reserve instalment |
| Capacity | Nesting CNC at 82.3% in year 5 (92% in the upside case) | Extra hours on the nesting machine first; second shift only past 85% |
| Rent and lease renewal | 36 months paid at signing; renewal at month 36 | Funding item, accepted by the client; month-33 red flag |
Price level as a new brand
The recommended plan prices catalogue items at the Kitea Ghana level, and projects about 30% above the Accra guide. A new brand with no showroom and no track record may not hold those prices from the first month.
Prices 10% below plan take the recommended five-year NPV from $17,197 to ($213,409) and the IRR to 8.2%, well below the cost of capital.
I would like to recommend a price test before any machine is ordered: pre-sell 6–8 catalogue items online and in a pop-up for two to three months, using samples from a contract workshop.
At least 30 paid orders within 10% of list confirm the price level. Fewer than 15 means re-pricing the catalogue before the equipment order.
Project and B2B volume
Projects carry over half of revenue, and the B2B line depends on contracts not yet signed. The client has no pipeline or contracts to share at this stage.
Project m² 25% below plan cut NPV including terminal value from $711,434 to $328,540; together with prices −10% it turns negative, to ($74,317).
We should consider appointing the sales and B2B lead before opening, working a hotel, serviced-apartment and developer list, with the first contract targeted by month 8.
An order book at months 12–18 of a second B2B contract and six months of project orders: the trigger for the next growth step.
What moves the result
Change in NPV including terminal value, USD
| Case | Value |
|---|---|
| RTA volume: −25% orders | ($24,487) |
| Project volume: −25% m² | ($449,518) |
| Channel costs: Returns +2 points | ($8,965) |
| Delayed opening: +3 months setup | ($59,262) |
| Machinery cost: +15% | ($61,169) |
| Electricity: +25% | ($13,138) |
| Cedi: −20%: prices held in USD, cedi prices +25%, volume falls | ($236,948) |
| Working capital: +50% | ($28,600) |
| Slower ramp-up: +6 months | ($71,914) |
| Management salaries: Management +3,500/month on top of the 4,700 now included | ($174,008) |
| Discount rate: +3 points | ($103,839) |
| Discount rate: −3 points | $143,002 |
| Materials share: Materials 55% → 70% of client cost (online margin 65.6% → 56.3%) | ($274,138) |
| Project price at the Accra guide: 205.7 → 154.6 per m² (GH¢1,800) | ($693,854) |
| Rebuilt prices (client machine time) | ($154,338) |
| Rebuilt prices + project materials from the BOM | ($455,544) |
Starting point: $246,072. Project price and project volume move it most.
More detail All sensitivity cases with lowest cash
| Case | NPV incl. terminal value | Lowest cash |
|---|---|---|
| Base (no change) | $246,072 | $39,260 |
| RTA volume: −25% orders | $221,585 | $39,137 |
| Project volume: −25% m² | ($203,446) | $30,100 |
| Channel costs: Returns +2 points; Marketing +3 points | $237,106 | $39,215 |
| Project overhead %: 15% → 10% (lower price) | $246,072 | $39,260 |
| Delayed opening: +3 months setup | $186,810 | $17,660 |
| Machinery cost: +15% | $184,903 | ($16,390) |
| Electricity: +25% | $232,934 | $38,322 |
| Cedi: −20%: prices held in USD, cedi prices +25%, volume falls | $9,124 | $35,622 |
| Working capital: +50% | $217,472 | $9,260 |
| Slower ramp-up: +6 months; +6 months | $174,158 | $21,633 |
| Management salaries: Management +3,500/month on top of the 4,700 now included | $72,064 | $16,849 |
| Discount rate: +3 points | $142,233 | $39,260 |
| Discount rate: −3 points | $389,074 | $39,260 |
| Materials share: Materials 55% → 70% of client cost (online margin 65.6% → 56.3%); Project materials at 70% of client cost | ($28,066) | $34,220 |
| Project price at the Accra guide: 205.7 → 154.6 per m² (GH¢1,800) | ($447,783) | $22,769 |
| Rebuilt prices: client machine time (1 h per closet): Average online price 199.2 → rebuilt; Online margin after materials at rebuilt prices; Project price 205.7 → rebuilt per m² | $91,734 | $36,595 |
| Rebuilt prices + project materials from the item BOM: Rebuilt; Rebuilt; Rebuilt; Project materials 70.7 → BOM per m² | ($209,473) | $29,607 |
Change in NPV including terminal value, USD (plan before improvements)
| Case | Value |
|---|---|
| Prices 10% below plan | ($475,397) |
| Prices 15% below plan (new-brand discount) | ($713,095) |
| Project m² −25% | ($382,894) |
| Website visitors −50% | ($291,671) |
| No B2B contracts | ($534,402) |
| Materials cost +20% | ($377,853) |
| Prices −10% and project m² −25% | ($785,751) |
| Liquidity: raw-material stock 90 days (slow imports) | ($33,549) |
| Liquidity: no supplier credit | ($16,775) |
| Liquidity: hotels pay 60 days after delivery | ($6,723) |
| Liquidity stress: all three together | ($57,047) |
Measured on Scenario 2 before the improvements (starting point $711,434). Price is the largest driver: a 15% new-brand discount removes the whole value. Liquidity moves the result far less.
The recommended plan under pressure
| Case | NPV incl. TV | NPV 5 years | IRR |
|---|---|---|---|
| L1 Lean staffing (11 operators, 14 helpers) | $820,389 | ($37,454) | 19.0% |
| L2 Order-book target years 1–2 (3 B2B contracts in year 2) | $729,457 | ($75,648) | 16.9% |
| L3 Website cost $150 a month | $729,150 | ($83,548) | 16.4% |
| L4 Project deposits 50%, 30 days before installation | $737,940 | ($67,165) | 17.3% |
| All levers together | $882,633 | $17,197 | 22.0% |
| All levers, prices 10% below plan | $401,859 | ($213,409) | 8.2% |
| All levers, prices −10% and project m² −25% (stress) | $85,541 | ($375,428) | (3.4%) |
L1–L4 are each improvement on its own; ‘All levers together’ is the recommended option.
More detail All sensitivity cases with equity and working capital
| Case | NPV incl. TV | NPV 5 years | IRR | Equity | Working capital, year 5 |
|---|---|---|---|---|---|
| Base (as planned) | $711,434 | ($93,671) | 15.9% | $730,241 | $103,016 |
| Prices 10% below plan | $236,038 | ($318,901) | 1.7% | $738,410 | $103,016 |
| Prices 15% below plan (new-brand discount) | ($1,661) | ($431,515) | (6.8%) | $742,494 | $103,016 |
| Project m² −25% | $328,540 | ($287,642) | 3.9% | $730,176 | $90,041 |
| Website visitors −50% | $419,764 | ($199,592) | 9.2% | $730,500 | $84,450 |
| No B2B contracts | $177,032 | ($302,195) | 1.9% | $727,831 | $89,030 |
| Materials cost +20% | $333,582 | ($282,813) | 4.5% | $745,217 | $123,619 |
| Prices −10% and project m² −25% | ($74,317) | ($474,956) | (10.4%) | $736,612 | $90,041 |
| Liquidity: raw-material stock 90 days (slow imports) | $677,885 | ($127,220) | 14.1% | $737,224 | $150,204 |
| Liquidity: no supplier credit | $694,660 | ($110,445) | 15.0% | $733,733 | $126,610 |
| Liquidity: hotels pay 60 days after delivery | $704,711 | ($100,394) | 15.5% | $730,593 | $114,906 |
| Liquidity stress: all three together | $654,387 | ($150,718) | 12.8% | $741,068 | $185,689 |
Upside (labelled, not in the headline figures)
Website traffic 50% higher (about $11,500 a year at $0.25 a visit) lifts the recommended IRR to 27.6%, if conversion holds at 1% or better and marketing stays below 15% of order value. The nesting CNC then reaches 92% in year 5. We would scale marketing step by step with measured conversion.
Red flags: when to act
The red flags are set for the recommended plan (Kitea-level prices, B2B contracts, the order-book target); switch to Recommended to see them. For the base option, the main risk is its prices: desks and shelves above Kitea, and every line above the Accra average.
Each red flag has a checkpoint, a green, amber and red level, and the action if it turns red. Two reds in a row on volume or cash is the stop rule.
Price test at Kitea-level prices (pre-sales, pop-up)
If red: Re-price the catalogue before ordering machines
Signed project and B2B order book
If red: Cut cost to the order book; review sales team
Project m² invoiced per month
If red: Cut cost; review prices and sales team
Project m² invoiced per month
If red: Stop: no further equity until re-scoped
Cash runway = cash ÷ monthly loss
If red: Owner decision on funds; stop discretionary spend
More detail The other 6 red flags
Project m² invoiced per month
If red: Freeze hiring; stop stock building
Online conversion (orders ÷ visitors)
If red: Fix website, photos, prices before buying more traffic
Marketing cost per online order
If red: Cut paid traffic; shift to referrals and B2B
Margin after materials vs price list
If red: Check discounts (max 10%), waste, board prices
Bottleneck utilisation
If red: Low: sell. High: overtime, then a 2nd shift
12-month result before lease renewal
If red: Do not renew on the same terms