194 ENTREPRENEURSHIP
Fortunately, our competitors in the online customized children’s apparel niche (see the Market
Analysis section) do not comprise the typical retail heavyweights like Wal-Mart and Target. Our
competition is very fragmented, is typically locally focused, and often focuses on marketing to
business and institutional clients rather than to consumers. We believe we can quickly carve out
a niche as the preferred national provider of personalized keepsakes. eBay will be a formidable
competitor since it has evolved into the preferred destination for all shoppers seeking unique
items. However, our research confirms that there is no national provider of customized children’s
apparel on eBay or other similar auction sites. Virtually none of the companies on eBay offer
world-class service, which is one of the pillars of the babyyourway.com approach. Nonetheless,
it will take a successful and sustained marketing campaign to steal significant eyeballs away from
eBay.
Customer Service. Our customers will expect us, as an online retailer, to offer adequate online
support. We intend to make both email support and live chat support available to meet cus-
tomers’ presale questions. Live chat support costs are included under Marketing & Selling
expenses on the Income Statement in Appendix A. Post-sale support will include a “satisfaction
guaranteed” returns policy. A Frequently Asked Questions (FAQ) page on the Web site will
answer the most prevalent pre- and post-sale questions. We do not plan to offer an 800 line for
telephone support unless client demand requires it. In that case we would likely consider out-
sourcing this function.
Distribution. We will ship via either FedEx or UPS. Both offer global coverage and their rates
are comparable, so we will choose one after closer evaluation of their services. Customers can
choose the timeframe for delivery on the checkout page.
Sales Forecasts. It was difficult to do an apples to apples comparison between our proposed
model and the existing competition because ours is a very fragmented niche consisting of sever-
al small players that do not provide public information. We have formulated our forecasts based
on conversations with other e-tailers and industry suppliers and on market information provid-
ed by Forrester Research, RMA, and First Research. We started off estimating conservatively that
we could sell approximately 28 items per day in Year 1 at an average transaction of $35. Driven
by a significant advertising and promotions budget, we expect sales to increase 60 percent year
to year for Years 2 and 3, followed by a tipping point somewhere in Years 4 and 5. At that point
we will experience 75 percent year to year sales growth. As outlined in the Market Analysis sec-
tion, we truly believe that the market for our products is rapidly expanding. This combination
of a growing market with repeat business makes us confident that our pro forma projections can
be met. See Appendix A for our full detailed projections for Years 1 through 5.
Financial Plans
Source of Funds. Seed funds for Babyyourway.com will be generated exclusively through the
founders’ equity stakes. However, in order to purchase the necessary production equipment, we
will need to raise an additional $300,000 in capital. The preferred method is through debt,
allowing the founders to maintain their initial equity stake. However the management team is
open to other structures, based on the merits of each offer. Babyyourway.com will be structured
as an LLC corporation.