Chapter 11

Risk register

Twelve risks, scored on likelihood and impact, each with the mitigation that actually reduces it.

Risk map

Likelihood on one axis, impact on the other. Anything in the upper right demands a mitigation designed into the business model rather than managed after the fact.

Likelihood versus impact
Both scored 1–5. Colour indicates risk category.
Hover any point for the full risk description.
Risk exposure by category
Sum of likelihood × impact scores.
Top exposures
Highest likelihood × impact, ranked.

The three that decide the outcome

Dead inventory

The most likely way this business fails, and the most boring. Capital locked in designs that do not sell, while the designs that do sell run out. Every other risk is survivable if cash keeps cycling.

Mitigation: validate in Phase 0 before importing; indent the long tail; hard 90-day sell-through review with a markdown rule.

Duty exposure on China

A single regulatory decision — a factory losing cooperating status, or a review raising the rate — can halve the gross margin on the volume route overnight.

Mitigation: run the Spain route in parallel from day one; verify the register before every purchase order; keep China below 60% of inventory value.

Lead-time rejection

Gulf customers are used to buying tile from stock. A six-week wait is a conversion killer if it is the only option, and a trust killer if it is not disclosed.

Mitigation: stock the top 8–12 SKUs locally; publish honest dates; use the sample pack to occupy the waiting period.

Full register

What would make this a no

A study that cannot say what would falsify it is not worth much. Three findings would kill this plan outright, and all three are testable in Phase 0 for about USD 22,000:

  1. Sample conversion below 15%. If people order samples and do not buy, the entire acquisition model collapses and no amount of margin rescues it.
  2. Acquisition cost above USD 250 per order. At a USD 1,150 average order and 60% margin, contribution is roughly USD 640 before acquisition. A CAC above 250 leaves too little to cover fixed cost at achievable volumes.
  3. Price benchmarking proves wrong. If real premium-tier retail in the target market turns out to be USD 15–18/m² rather than USD 27–49, the margin thesis disappears. This is the specific reason the Kuwait chapter flags its modelled prices for physical verification.
Honest framing

None of the risks above is unusual for an import-and-sell business. What is unusual here is that the largest single one — the anti-dumping duty — has a clean structural hedge built into the plan, because Spanish tile enters the same markets duty-free. Very few importing businesses get a hedge that clean against their biggest regulatory exposure.