Sharks Jealous of 21 Year Old's Unbelievable Monthly Income | Shark Tank AUS

Summary

Bree Ella, a 20-year-old entrepreneur, pitches her dress rental business, 'Your Closet,' on *Shark Tank*. Offering high-end designer dresses at a fraction of the cost, Bree's business targets women in need of formal wear for special events. Despite growing success with monthly revenues of $35,000, Bree faces challenges scaling her home-based operation. Investors express concerns about logistics and expansion. Bree negotiates a deal, ultimately securing $80,000 for a 30% stake from investors Janine and Naomi, who bring valuable industry expertise to help grow the business.

Takeaways

• 😀 Bree Ella, a 20-year-old entrepreneur, founded 'Your Closet,' an online rental service for high-end designer dresses aimed at women attending special events like formals, weddings, and galas.
• 😀 The business offers dresses for rent at a fraction of their retail price, typically 18-20% of the original cost (e.g., a $1,000 dress rents for about $180-$200).
• 😀 Bree's business idea stemmed from personal experience and addresses the high cost of formal wear that is often worn only once, making it a sustainable, cost-effective solution.
• 😀 Since launching in August 2014, 'Your Closet' has expanded to offer dresses from leading Australian designers and aims to normalize renting high-end fashion for special occasions.
• 😀 Bree's current business operations are home-based, and the stock is valued around $200,000, funded by an $82,000 personal loan.
• 😀 Bree reported monthly revenues of $35,000-$36,000, with profit margins running at approximately 55%, but has not yet taken a wage, reinvesting all earnings into the business.
• 😀 The business offers a seamless rental experience: customers select a dress online, have it delivered, wear it, and return it in a prepaid satchel within 4 days, with dry cleaning covered by the company.
• 😀 Bree faces scalability challenges, including transitioning from a home-based operation to a warehouse and managing the logistics of a growing inventory and dry-cleaning services.
• 😀 Investors raised concerns about the operational risks associated with the business's logistics and the need for additional capital to set up a warehouse and improve scalability.
• 😀 Bree secured an investment offer of $80,000 for 30% equity from two investors, Janine and Naomi, who emphasized the importance of their expertise in scaling the business.
• 😀 Bree accepted the offer, with the additional provision that she could earn more equity through 'sweat equity' as she works in the business, helping her grow it further.

Q & A

What is Bree Ella's business, and what does it offer?

Bree Ella's business is called 'Your Closet,' an online fashion rental service that allows women to rent high-end designer dresses for special occasions at a fraction of the retail price. The business targets women who need designer dresses for events like formals, galas, and races but want to avoid the high cost of buying these dresses.

Why did Bree Ella decide to start this business?

Bree Ella started 'Your Closet' after experiencing the high cost of formal wear herself. She was invited to multiple formals, and the expense of purchasing dresses she would only wear once prompted her to launch a solution to make designer dresses more accessible and affordable for women.

How does the dress rental process work for customers?

Customers visit the 'Your Closet' website, choose a designer dress they like, select a delivery date, and the dress arrives in a pristine box. After wearing it to their event, the customer returns the dress by placing it in a prepaid satchel and drops it off at the post office. The business handles dry cleaning.

What percentage of the retail price does Bree Ella charge for renting a dress?

Bree Ella rents out dresses for approximately 18-20% of their retail price. For example, a dress worth $1,000 would be rented out for $180 to $200.

How long does it take for customers to receive their rental dresses?

In Sydney, customers can receive their rental dress within three hours. For other capital cities in Australia, the dress will arrive the next day via express delivery.

What size range does Bree Ella's business cater to, and is there room for growth in this area?

Currently, the business offers dresses in sizes 6 to 12. However, Bree Ella acknowledges that the average woman is often larger than that, so she plans to expand the size range over the next 12 months.

How does the business handle damaged dresses?

If a rented dress is damaged, customers are required to pay a small fee for the damage and then take ownership of the dress. Bree Ella mentioned that roughly 0.5% of dresses are returned damaged.

How did Bree Ella fund the initial inventory for 'Your Closet'?

Bree Ella took out a personal loan of $82,000 to fund the initial inventory of dresses for the business.

What were Bree Ella's monthly revenues leading up to the pitch, and how does the business handle profits?

Bree Ella's business was generating revenues of $35,000 to $36,000 per month. The business runs at a profit margin of approximately 55%, and Bree Ella reinvests the profits back into the business, not taking a personal wage.

What is the main challenge Bree Ella faces in scaling 'Your Closet'?

The main challenge Bree Ella faces in scaling the business is managing logistics, especially warehousing, and ensuring that dresses are properly dry cleaned and delivered on time. The business currently operates out of her house, which is not sustainable for long-term growth.

What was the offer made by the investors, and how did Bree Ella respond?

The investors, Janine and Naomi, offered Bree Ella $80,000 for a 30% stake in the business, contingent upon both of them being involved in scaling the business. Bree Ella countered with a proposal for 30% equity, split 15% each for the two investors. The deal was finalized with the investors agreeing to this proposal.