Question #6 (25 points Total) APPLICATION OF TOPICS Pick one episode of Shark Ta
ID: 1109181 • Letter: Q
Question
Question #6 (25 points Total) APPLICATION OF TOPICS Pick one episode of Shark Tank or The Profit (can be found on YouTube, etc). Tell me what the product was. Based on what you have learned in class, and regardless on if they invested or not, how would you advise the Sharks on what questions to as to make suree make a good decision with their money? Would like to see at least 3 things they should ask the presenters (and why it was important in the decision) AND 2 things that could have been improved or needs to be determined before they can decide to invest. Page 6Explanation / Answer
Product Name- Toymail.
The product helps to connect families, especially when they are geographically apart. If parents don't wish to give mobile phones to their children they can simply use toymail as it is simple and convenient to use. Using talkies in form of toys, kids as young as 3 years old can send a voice message to their parents. This message is received by the parents or the assigned contact in the toymail application on their phones. They can also reply with a voice note and send it to their kids. This helps in connecting families without giving kids cell phones in the most simple and easy manner.
3 important questions to be asked by the sharks.
1. What are the sales of the product?
It is important to know before investing money if the product is actually selling in the market. Also, where exactly the sales are coming from in terms of country and platform. If a product is selling well and growing every year it is good investment proposal as earning money and return is the first and foremost reason for investment.
2. What are your costs and inventory of the product?
In order to earn heavy profits, the cost of making the products and overheads including rent, insurance, electricity etc should be as low as possible. Lower the cost higher the profit margins. A product should have a low overall and per unit cost in order to survive or it should have a very high demand to keep the prices high. Also, it is important to consider if the product is actually selling or just lying in the warehouse. Higher inventory with low demand is an absolute unattractive investment proposal as the money spent on creating the product is higher than the money earned from selling it.
3. Valuation of the company and equity percentage.
There has to be a concrete explanation for the valuation the company. If the valuation is high even with low sales it might give a negative image of the company or requires very strong logical reasoning. Investors expect high equity holding in order to invest money as this gives them more power to exercise control over the product and the company itself. Higher the equity holding higher the profits earned from investment.
Questions that should be considered to improve the investment decision.
1. Ask about competitors.
It is essential to check if a product has competitors in the market. For eg, there are many soft drinks in the market and creating a new one for a new business requires good marketing budget as there are fewer chances to survive in the heavily competitive market.
2. Long-term product
An attractive investment prosal comprises of a product that has a long life and not just trendy in short term. For a successful and long-term business, it is important for a product to survive in the market for long term.