Entrepreneurship and Initial Business Model Essay

Submitted By Aqilsaad
Words: 614
Pages: 3

Memo #4

The business plan for Zipcar includes many elements. The idea was to provide convenience, ease of use and freedom to travel to customers. It was for people who wanted a personal car occasionally, but did not want to own it. The Zipcar would be convenient, save them money, and be environmentally friendly. Reservations would be taken upto 2 months in advance and telephone and website support would be available. Zipcar needed technology to ensure the car would be received by the driver who signed up for it and to record the usage data for billing purposes. After researching different pricing structures and revising the initial pricing structure, it was concluded that there would be a $75 membership fee per year, and in addition $4.50-$7.00 per hour would be charged. It was assumed the company would earn about $5.50 per hour per customer. Drivers would be responsible for basic maintenance of the car such as cleaning, gas and taking responsibility of parking tickets. The business was planned to be launched in a single market and would expand to 14 cities in U.S once it was successful. It would most likely be launched in Boston initially since Boston had a large number of college-educated and web-connected individuals, who could utilize Zipcar’s service and become potential customers. This venture was proposed by Danielson, who had experience in car sales and as a research assistant. However, it was carried out by Chase, who had her MBA in applied economics and finance and wanted to become an entrepreneur. Chase researched, wrote the business plan and looked after financing matters while Danielson had car industry relationships so she negotiated for car purchases, worked on environmental issues and edited documents which Chase created. Chase believed that the car-sharing business would be successful and the North American market had a lot of potential for it since there was not too much competition in this industry and it was a virtually untouched market. In 1999, 20 million Americans used public transportation to get to work and these could be potential customers for Zipcar. In December 1999, Chase came up with the initial business model. She decided that customers would be required to become members and they would pay a $25 nonrefundable