History
Hearthquake is a website that has the ability of enhancing effective sale and buying of products through the social platform. The company was founded by 6 individuals who are focused on the value of providing the best online solutions to both buyers and sellers of the various products. In terms of capital, the website is expected to have $5mm in order to attain its cash flow breakeven by the time two years are over. On the same note, the cash burn rate is expected to escalate effectively over the next few months. At start, it is expected that one of the group members’ relative will grant Hearthquake $1mm in exchange of an equity value of $1.5mm at the time of securing the new capital. Further, it is expected that the company remains private with sole ownership being bestowed to the group members and not being sold to become a public company in a near future of less than 5 operating years.
At the start, it is expected that the company will incur a lot of expenses during the first and second years. These expenses include server and website development expenses, contract development expenses and expenses in the development of online purchasing and payment system among others. A straight-line method was used to determine the rate of depreciation. This was considered for 5 years of equipment life that resulted in attainment of 20 percent value for each year.
The percentage growth of new users for each year for 5 years is estimated at 174 with those buying through the website expected to increase with a percentage between 10 and 39 percent. The expenditure of each customer for the year is estimated to be between $28 and $90 for the span of 5 years. These estimates were derived from the conservatism and underestimated calculations. As such, it is expected that investors would obtain accurate information on expectations and their promises would be fulfilled effectively.
Inventory requirement is not necessary for the company. This is because the company is focused on connecting between customers and brands and it will not be involved in buying anything. Further, the company will not have an advertisement within its first 5 operation years. However, the advertisement option may be considered after having the IPO. This will not be considered as a profit generation venture. The company focuses on reaching its target audience through linkage with other social media sites. These include Twitter and Facebook. This strategy is perceived to be economical and will enhance easy access to potential users. The assumption here is that users who will use the company site have the ability and potential to use and interact with these other social sites. In comparing to more than 1000000000 Facebook users, 30000000 GooglePlus and 15000000 Pinterest users, expectation of 2725556 users at the end of the 5th year seems logical and realistic. However, the optimization of the company has been increased in order to ensure that the company has the ability of attaining its desired success.
Compared to Amazon and eBay, the website is advantageous in providing quality services to users. This includes having interactive features for both buyers and sellers in a secure platform. However, the website is disadvantaged since it does not have the current user base, which is enjoyed by Amazon and eBay. Nevertheless, this situation will be overcomed with the continued use and attraction of customers by the website.
Vision
The vision of the company is that “to be the best linkage between brands and customers”.
Mission
The mission of the company is that of providing customers with the best services in terms of a platform where they can meet their sellers and make purchases online without experiencing logistics problems.
