HEATHER EVANS CASE SOLUTION
Evaluate the opportunity / business model for Heather Evans.
Heather Evans was active in figuring out the opportunity and worked really hard to capitalize on this opportunity. This opportunity seems to be well planned, with 4ps of marketing and segmentation studied quite extensively. Addition to that, this opportunity appears to be quite attractive for investors, as well. If one looks at the skills and opportunity, then it appears to have a good fit between her skills, her enthusiasm and the market needs she identified. Moreover, the segment identified is unsatisfied; this segment is quite fragmented and at the same time, it is growing. The capital needed for this business is not extensive, and so the initial investment. If one analyses the control factor, Heather, like many other entrepreneurs, want to have full control including designing and managerial. This can have a downsize effect as it can include the risk as she is making her own designs without professional designers. The business plan and the financial steps or forecasts are just prepared for two years, which may also be a serious concern for investors’ reluctance. Last, but not the least, her efforts are to be appreciated as she has already hired staff, building and even paid the rent. This can be a reason to build a credibility factor.
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Evaluate Heather’s efforts to date in the case.
Heather, since the inception of the idea, has put in lots of efforts to make this business a reality. She was very active and kept her eyes open to catch any opportunity that can add onto her business. She took lots of time and ensured an experience to develop a business plan. She took time, at the expense of her studies; she left her job to pursue her idea. She hired the person, Mr. Robert, to help her in designing. She was quite flexible with her decisions, and she did fire the designer she hired because he was not matching her expectations. She was quite proactive and anticipative. She, in order to attract the investors, built up the momentum and hired the professional and started to pay. Moreover, she hired a place that was not really attractive, and when she got an offer to move to 550 Seventh Avenue, she accepted and started paying rent. Moreover, she was counting too much on Arden & Co. On the other hand, she did select many alternatives to get financing done, and so kept many other options open. She was quite active in looking for finances. Moreover, the business plan was quite extensive with an extensive marketing research. But this plan is a reason for reluctance for investors because of budgeting for only two years. Overall, she was quite active and matured in her efforts.
Evaluate her business plan.
Heather’s business plan is backed up by superior experience and grandeur marketing research. She has a great experience while working with Morgan Stanley. Her business plan is based on her personal experience and clearly translated the idea to investors as it clearly identities the gaps, and steps to serve those gaps. Addition to that, it clearly defines the customer needs and identifies the competition. Moreover, in order to get more investors, she presented the status of business as running. By doing this, she can get to win the investor’s trust and her seriousness in the business. However, in the management, she appears as most of the management positions. This business plan identifies a positive perceptive in the business growth and presents a quite optimistic view about the business growth. Addition to that, it represents a target audience that can be charged premium i.e. 4 million women spending 5 billion annually and represents a market growth. However, the financial aspect of this plan is not very feasible; it represents a forecast for only two years. For an entrepreneurial venture, it is more viable to have a forecast for at least five years.
Evaluate each of her financing alternatives. Who should she approach and on what terms?
Arden & Co is a potential investor but Heather has higher expectations with this investor. Instead of getting more time on it, it should focus more on getting funds from investors that can provide her investments at the time of need. She can later approach them for the need of finances’ keeping her interest of name, control and remaining private.
Venture capitalist firms needs more time to make decisions, so she should keep negotiations with them, but certainly, they are not going to get investments quickly. Addition to that, she will have to give control of business, and she will have to get tough bargains.
For, the Helen Neil Fashions Inc., there is a possibility of another aspect which Heather never want to give up i.e. control. She is having her interest in keeping away from joint ventures and sharing the business.
Last, but not the least, the private investors, are good options. Especially, Paul Hood, who is her HBS classmate, and is willing to invest and provide her with initial financing without claiming anything that Heather don’t want to give up. Private investors are more attractive option not threatening her requirements and also providing with investments which is much needed.
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