Shark Tank Episode Information
The episode selected for review is available on YouTube. The name of the entrepreneur is Aaron Krause. The name of the product is Scrub Daddy (“Shark Tank Episode Scrub Daddy Full HD”). There is a need for a high-tech scrubbing tool for cleaning every type of surface.
The scrub changes its texture with the temperature of water used for cleaning surfaces. The scrub can use for both fragile and tough surfaces. Moreover, the product does not develop an odor for at least two months. The entrepreneur asks for $100,000 for a 10% stake in the company’s equity (“Shark Tank Episode Scrub Daddy Full HD”).
Accounting Details
The product is selling in five departmental stores in Philadelphia and on the company’s website. The recent sales were more than $100,000 in 4 months. The cost of producing one unit of Scrub Daddy is $1.00. The company sells the product to retailers for $2.80 (“Shark Tank Episode Scrub Daddy Full HD”). The entrepreneur does not differentiate between variable and fixed costs of production. Therefore, it is not possible to identify the proportion of cost that varies with the product sales. The net income of the company is calculated in the following.
Income Statement for 4 months
Sales (100,000 x $2.80) $280,000
Less:
Cost of Sales $100,000
Net Income $180,000
The company expects to sell its products in additional 3,000 stores across the U.S. The projected sales are based on the estimated number of stores where the company can sell its products and the recorded sales of the company from 5 stores. Moreover, it could be stated that once the product is launched and its sales stabilize, its sales will slow down. Therefore, the total projected sales are adjusted by a percentage of 50% to derive a realistic sales figure.
Projected Sales ($100,000/4months x 12 months x 3,000 stores x 50%) = $450 million.
The project net income of the business is calculated in the following.
Projected Sales $450,000,000
Less:
Cost of Sales (450,000,000/$2.80 x $1) $160,714,285
Net Income $289,285,714
The Sharks identified that the presentation did not include the cost of cardboard displays. Moreover, they identified that the entrepreneur did not have confirmed projected sales. I agree with both concerns as the company needs to include the cost of marketing and distribution in its cost analysis. Also, the company did not have any confirmed deals with retailers. Both issues can affect the company’s cost and net income.
Best Part of the Pitch
The entrepreneur justifies the criticism related to the cost of his product by stating that the product cannot be compared to the lowest end products available in the market. It should be placed in the higher bracket because of its high quality.
It indicates that Sharks agreed with the pricing strategy of the entrepreneur. The quality of the product makes it a premium product and there could be a lot of sales due to the high demand for scrubbing material in the U.S.
The Sharks Bite When
The entrepreneur said that the company’s product would be available in 3,000 stores. It implies that the company can easily achieve its sales target if it can set up the automatic manufacturing unit (“Shark Tank Episode Scrub Daddy Full HD”).
The new business needs to have strong sales prospects to convince investors. The investors expect a high return on investment, and they believe that Scrub Daddy can be a market success.
Result
The deal was made between Lori Greiner and the entrepreneur. The offered amount was $200,000 for a 20% stake in the company’s equity. The Shark offered complete access to all major retailers and QVC (“Shark Tank Episode Scrub Daddy Full HD”).
The follow-up of this deal indicates that the business was a success. The new product achieved significantly high sales and the venture has turnover into a multi-million dollar business.
Works Cited
Barbuti, Angela. “The Paint Brush Cover Re-Enters the ‘Shark Tank’: 5 Fast Facts You Need to Know.” Heavy, 2015. Web.
Kahn, Steven. “The Paint Brush Cover Update – What Happened After Shark Tank.” Gazette Review. 2016. Web.
“Shark Tank Episode Scrub Daddy Full HD.” YouTube, uploaded by JigglyBoop. 2015. Web.
“Shark Tank The Paint Brush Cover by Likwid Concepts Update and Original Episode.” YouTube, uploaded by The Pain Brush Cover, 2015. Web.