Best Wardrobe Solutions
Best Wardrobe Solutions is a company from St. Louis, MO, that has created a way to keep pocket squares neat and clean all day long. Essentially, the entrepreneur behind this company has developed a pocket into which the pocket square is put that is then put into the jacket pocket. Even Ray Lewis attests to it.
Each of these pocket square... pockets(?) retails for $19.99. They are available at wholesale for $7.50 per unit. It currently costs $3.40 per unit to manufacture because all manufacturing is done in the United States (in St. Louis, actually) by ten seemstresses he sources it out to. In the lifetime of the company, Best Wardrobe Solutions has sold 52,000 units and the entrepreneur projects $398,000 in sales by the end of the year.
The product is sold on the Best Wardrobe Solutions website, through Amazon and Etsy and at church conferences. However, wholesale makes up the bulk of the sales, up to 70%, the entrepreneur says.
Best Wardrobe Solutions is looking for capital to help bring down the cost of manufacturing by moving all production into an assembly line.
Making A Deal
Mark is upfront and says that he doesn't like wholesale or see it as a fit for him and drops out. Robert says that, while he thinks it's a neat product and might use it, he sees it as too niche and, likewise, is out.
Kevin, on the otherhand says that he thinks that he could really blow it up and make the product a big deal by getting behind it. But, as is his style, Mr. Wonderful isn't so interested in a straight equity deal. Instead, he offers a royalty of $1.50 per unit. Daymond asks how long he intends to let the royalty run and Kevin responds by looking at the entrepreneur and asking, "How long are your going to be alive?" The clear implication is that the royalty will be perpetual.
Daymond wonders aloud whether and where he could add value to Best Wardrobe Solutions and its product. He states that he doesn't think he would be able to help with sales and that the entrepreneur already has a celebrity endorsement in the form of Ray Lewis. Because of these factors, Daymond drops out of the deal.
Lori, likewise, states that she doesn't see where she would add value. Also, she says, Kevin's deal isn't so bad so she drops out as well.
The entrepreneur asks where Kevin sees himself helping out and Kevin says, "with everything, everywhere."
When the entrepreneur states that, with an investment from the sharks, he can reduce his manufacturing costs to $2.04 per unit, Daymond jumps back into the deal and offers a royalty of $1 per unit instead of Kevin's $1.50. The entrepreneur jumps at Daymond's offer.
Becuase this deal doesn't include an exchange of equity in exchange for money, there is no change to the company's value. However, a perpetual royalty may affect the sales price of the company in the future as any potential buyers would have to take the cost of that into consideration. Unfortunately, there is no way for your Stats Shark to value here and, so, according to this site at least, the company's value remains unchanged.