How Independent Analysis Stopped a Cyprus Business from Making an Unnecessary Investment

The client

A specialist Cyprus service and repair business, well established in its field, considering a significant investment in new equipment. A government grant covered a large share of the cost, which made the purchase look like an easy decision.

The engagement

Velricon was engaged to answer what seemed like a straightforward question: of the equipment options available, which one should the company buy? The grant made the investment attractive, and the expectation going in was that we would help choose the best machine.

We took the question seriously, but we started a step earlier than expected, by asking whether the company needed to buy anything at all.

What we did

Rather than jump straight to comparing equipment, we analysed how the business was actually performing and where its real constraints were.

• Assessed the operational efficiency and performance of the business, measuring how much of its existing capacity was genuinely being used
• Examined how the equipment already in place was being used, and found it was running well below what it could handle
• Looked at why, and traced it to the workforce: there were not enough people to run the existing equipment to its full potential, and the team in place was not performing at the level it should have been
• Built financial projections and appraised each of the investment options on its own merits, so any recommendation would be grounded in numbers, not assumptions
• Ran multiple scenarios and sensitivity analysis, testing how the outcomes changed under different levels of activity and performance
• Prepared cash flow projections to confirm the business could comfortably support whichever path was chosen

What we concluded

The analysis pointed clearly in one direction, and it was not the one the company expected. The equipment already in place was significantly underused, but not because the business lacked work or lacked machines. It was underused because there were not enough people to run it fully, and because the existing team was not yet performing to its potential.

Adding more machinery, even with a grant covering half the cost, would not have changed that. It would have placed still more equipment alongside equipment the business already could not fully use. The real constraint was the workforce, in both numbers and performance. So our recommendation ran against the obvious, subsidised choice: strengthen the team and lift performance so the existing equipment could be used properly, before spending on more of it.

Why it mattered

A grant that covers half the cost of an investment is a powerful pull toward spending. The easy, and profitable-looking, path would have been to help the client choose a machine and move on. Independent analysis showed that the money would not have solved the problem it was meant to solve, because the problem was not the machinery. By identifying that the real issue was workforce capacity and performance, the work helped the business avoid an unnecessary investment and focus on the change that would actually improve output. That is the value of independent financial leadership and decision support: the recommendation follows the economics of the decision, not the availability of funding.

It is the same question we asked in an earlier engagement, where a Cyprus SME found it did not need a €500,000 loan once its margins and cash flow were properly understood.