Day One
Instructions:-
Review the Day One Case Study at the end of Chapter 9.
Compose a minimum of 1,100 words in which you discuss the Day One Case Study:
•Examine what more the members of the Day One team can do to build credibility and improve their chances of securing the capital they need to implement the business plan.
•Discuss what other options might be considered for raising the funds needed to move the company ahead.
•Evaluate if Day One has proven the model yet, given that Andrew has approached you as a potential investor.
•Explain any concerns you may have.
•Explain reasons why you would or would not invest in Day One. Format consistent with APA guidelines.
Solution
Day One
Examine what more the members of the Day One team can do to build credibility and improve their chances of securing the capital they need to implement the business plan.
The business is doing well with one primary location since they can turn up a profit. They received an accolade for being the best in San Francisco, and that is a significant step in the right direction considering the massive size of the city. They had achieved to receive the accolade in their second year of doing business, and that is an amazing feat for any start-up company (Bygrave, & Zacharakis, 2014). However, there are other ways that the firm could utilise to increase their chances of securing funding.
One of the focus areas in improving chances of funding ought to be in the business plan. The plan gives investors a window into the firm and the industry in general. Investors can look at the ideas and determine whether they will make a return or not and, then decide on the appropriate course of action. Andrew did not spend enough time and resources in crafting a business plan that was conclusive (Bygrave, & Zacharakis, 2014). While seeking the initial funding, he was writing the business plan while working on the requirements for the build-up. The plan requires focus, a long research and a SWOT analysis to convince investors of the safety of investing in the industry. He needs to consult widely and explore the industry to come up with a document that will convince investors. A competitive analysis of the market allows the investor to gain confidence with the success of the business plan and the attention to detail.
The members ought to be flexible in their business model. A flexible model can accommodate various ways of doing business, and that means more income streams. DayOne needs to look at the possibility of opening an online company to capitalise on the big business on that platform (Bygrave, & Zacharakis, 2014). Online business has become a massive market over the years, and this form of market diversification will allow the company to open new business frontiers. An investor was ready to offer $1.5 million for an internet company, and the company must be keen to capitalise on such opportunities in the future (Bygrave, & Zacharakis, 2014).
Discuss what other options might be considered for raising funds needed to move the company ahead.
The company must seek other options to make sure that they secure the necessary funding to achieve the company objectives. They should consider other avenues of raising capital instead of depending on word of mouth referrals such as the case of the Saudi prince.
One option that DayOne could explore is to launch a crowdfunding campaign on one of the popular sites like Kickstarter. Crowdfunding is a strategy that is becoming increasingly popular as more start-ups seek increased avenues for funding (Lewis, 2013). They should upload a detailed description of the business and other details like finances, business strategy, target audience and other details to enlighten the people and give information on the firm. Anyone who is interested in the plan can use their money to invest in the business. The business has a sound strategy and business model that offers plenty of essential services to new mothers. These people who benefit from the firm or see an importance in society are likely to contribute in the crowdfund. The company ought to leverage their demand to gain funding to accomplish their objectives.
The management of DayOne could also consider going the route of venture capital to secure funding for the company. Venture capitalists have money to invest, and they require a certain amount of equity in the business (Lewis, 2013). They might seek out these kinds of investors and present their business plan. The idea of the firm is attractive enough to entice interested investors to the company. Venture capitalists are interested in the financial gain, but the main aim of the company is to secure capital since there is potential for profits.
Evaluate if Day One has proven the model yet, given that Andrew has approached you as a potential investor.
To assess the business model of the company, I will have to consider various aspects of the company to determine whether it is viable to invest or not. I will first consider their intended product market against the actual records on the ground. DayOne have been able to capitalise on the needs of new mothers to offer services essential products and important advice.
I will then consider how customers react and relate to the company products. Based on the case study, many mothers talked of the advantages of using the products, causing word of mouth to become one of the main ways the company used to market themselves. It is crucial to consider the marketing or promotional strategies to determine a successful business model (Bygrave, & Zacharakis, 2014).
The company is not an online business but rather a brick and mortar location. The location of their business is on the second floor of a newly constructed building, and they have been able to conduct significant business from this single location. It has products on shelves and trained personnel ready to offer services and answer any questions. According to the financial data, all the goods carried by DayOne show a healthy profit margin and hence the possibility to make profits if sales are guaranteed. The company is a premier care centre as well as a retailer for all the needs of new mothers and infant children. These two approaches are the main streams of income for the company. The company have been able to prove their business model, and I would consider investing with Andrew if he approached me.
Explain any concerns you may have.
The only concerns I have regarding DayOne is their approach in seeking investors. They have a brilliant business model that they have worked hard to prove, and now they should be using other avenues instead of seeking individual investors. The problem with waiting too long is that other companies will come in and offer similar services hence undercutting DayOne and slashing the profit margins on the products.
The other concern still revolves around coping with increasing competition. The company has to keep innovating and coming up with new services to keep the customers happy and stay ahead of competitors. People are going to imitate ideas that are proven to bring returns in the long term, and DayOne should be keen to capitalise on all the hard work they have done.
Explain reasons why you would or would not invest in Day One.
I would invest in the company because they have proven their business model. They were able to plan and set a target market. They have been able to cover all their expenses from the single store, and hence the model can be franchised or distributed in brick and mortar outlets.
Secondly, there is an increase in the percentage of women who chose to breastfeed their children meaning that the market for the products will be steady (Bygrave, & Zacharakis, 2014). A constant market is a good sign that investors look for before investing in a company. It means that my money will increase in value if I invest in the enterprise.
The success they have enjoyed despite all the initial
hurdles is a sign of resilience and steady leadership. Investors must make sure
that the leadership in the company is good enough to ensure good returns. These
three reasons turn me into a willing investor for DayOne.
References
Bygrave, W., & Zacharakis, A. (2014). Entrepreneurship (1st ed.). New Jersey: John Wiley & Sons.
Lewis, M. (2013). 6 Things You Need to Know About Raising Capital for a Small Business. The Huffington Post. Retrieved 19 May 2017, from http://www.huffingtonpost.com/michael-lewis/6-things-you-need-to-know_b_3484069.html
