Case

DIVINE WORD COLLEGE OF LAOAG SCHOOL OF BUSINESS AND ACCOUNTANCY GENERAL SEGUNDO AVE., LAOAG CITY

In Partial Fulfillment of the Requirements In FM 009 Venture Capital

CASE ANALYSIS (ROXANNE QUIMBY: Burt’s Bees)

Submitted to: Ms. Leilanie Jane T. Mateo Instructor

Submitted by: Claire Cimatu BSBA- 4 January 11, 2011

1. Who can be an entrepreneur? •

Entrepreneurship does not choose who to consider as an entrepreneur. Like Roxanne Quimby and Burt Shavitz, any ordinary person can become an entrepreneur as long as they have bright ideas and opportunities that they can use into discovering things. Another thing is that entrepreneurship is not scrupulous of discrimination- whatever your gender, age, race, etc., you can become an entrepreneur as long as you have the capabilities, talent, and expertise and if you have the heart to become one. Most importantly, you can be an entrepreneur as long as you have money to capitalize on, and you have resources to start a business. A good quality of an entrepreneur is that one who has strong personality, like Roxanne Quimby who started without even knowing how the business would turn into. An effective entrepreneur is one who knows how to deal properly with circumstances and uncertainties. In some instances, becoming an entrepreneur is either when you learn to become one, or you are born into it. In real life situation, especially in the Philippines, poverty drives the entrepreneur spirit of the people. This is why there are a great number of industrialists in the community. Generally, people are motivated to becoming entrepreneurs with the goal of making money or in some cases, just to make themselves busy. Whatever it is, an important thing to consider in becoming a successful entrepreneur is that you have dedication and passion. With this, anyone can be an entrepreneur especially when they are ready to make personal and financial sacrifices.

2. What are the risks, rewards, and trade-offs of a lifestyle business vs. a high potential business- one that will exceed $5 million in sales and grow substantially? •

A lifestyle business is one in which the founder is also the owner of that business. This encompasses being happy of what you are doing, with your customers, but you remain stagnate.

Many small businesses seem to be quite content being floaty lifestyle

businesses where risk is minimal, things are profitable and existing customers dont raise above the parapit. The risks involved in a lifestyle business is that it is not firm

enough, and may have to fall especially when external factors, such as global economy takes dramatic shift. Another thing is that, in a lifestyle business, you were contented with the day-to-day operation when in fact you would have had higher profit if you discover something new or at least make an expansion if you are determined that your business would have high potential in the market. In this kind of business, you are risking the opportunity and you will not be able to hire top talent (as talented people usually avoid companies that offer no stock options and only limited opportunities for personal growth) and not having the chance for huge gains. The risk involved in a lifestyle business is much lower than that of a big company. It is generally a local business that will likely never have yearly sales greater than one million in a year. While there are risks involved in a lifestyle business, there are also rewards that it takes. Since most small businesses create jobs, they can help the poor people who lack expertise but are dedicated to work, which causes cheap labor. A lifestyle business does not have to pay high taxes and the like. The rewards also include being able to control the company, being able to continue to do what you love without having too much risk, having a positive cash flow from the early going, only having to report to yourself, having a relatively constant cash flow, and being able to take time off whenever you want. The decision to keep your business small can offer the ability to control your time and make it more flexible for other parts of your life. But, your income potential will be more limited and you will have to be content with passing on opportunities to add on more products, move into other geographic locations, or maximize your share of the market. On the other hand, high potential businesses generally are either developing a product, are based on a technological breakthrough or change in regulatory environment, or are raising venture capital to explore a lucrative opportunity. These businesses are more risky than lifestyle businesses. The higher the profit, the higher the risk expected. One risk that you have to consider in a high potential business is the usual necessity for the company to take on large amounts of debt or lose significant amounts of equity, a loss of control as investors and employees dilute the founder's equity, and the long wait to reach positive cash flow. Meanwhile, rewards of a high potential business include the possibility for large returns on your investment, the ability to attract outside investment, and the ability to build a great team who will work

to make your company succeed. Whether it is a lifestyle or a high potential business, there are business and industry risks involved, and rewards it takes. The trade-offs between a lifestyle business is that it offers lesser risks but with lower profit. It costs cheap labor to hired workers but remains stagnant and cannot go up like any other potential businesses. A lifestyle business may have great opportunity but they let it pass because all the resources are limited. High potential businesses also has trade-offs. High growth ventures offer high rewards of income and wealth. But, they also come with the risks associated by pursing such ventures. Your income is more at risk, certainly in the short-run. Your family will likely see you less. Your hobbies and interests will take a back seat. You would be more busy because you can feel that your business needs you. Whatever it is, whether a lifestyle or a high potential business, there is still risks and rewards involved.

3. What is the difference between an idea and an opportunity? For whom? What can be learned from Exhibits C and D? •

Idea and opportunity are two different things. In this case, when Roxanne thought of doing partnership with Burt in establishing a business is not necessarily a real opportunity, but just an idea. She had filtered that idea, sifts through it, and looked for the opportunity. An idea remains an idea with no value unless you make business in it, while in opportunity you need to know what problem you're solving and which people you're solving it for. And are there enough people who have the problem who will pay enough to make a sustainable business. An opportunity is an idea that can be implemented, for which resources are available, that will prosper. Opportunities are far rarer–and way more valuable–than ideas. In the case of Roxanne Quimby, who would thought that a very simple idea of making business with Burt Shavitz would create an opportunity to success.

•

Exhibit C shows the establishments of toilet preparations, its employment, compensation and production. This exhibit would help Roxanne to decide and think on how this industry goes for the recent years, since, she decided to focus on skin care

products. In Exhibit C, you can see that in the year 1988 the total establishments became lower, but from year 1992-1993, it became high.

4. Why has the company succeeded so far? •

The first and foremost thing that made the company succeeded is because of Roxanne’s skills and talents, and of course her bright idea, and with this idea, she found an opportunity and upon execution, the business succeeded so far. It’s a good thing that the entrepreneurial mind of Roxanne made her way to become committed and be more serious with their business and along the way, good things happened. For me, what made the company succeeded is because of their commitment to delighting the customers, their hard work, and their continued support and belief that the company would grow even more, they are being inspired by all of it, and of course, the knowledge where it all came from- from one simple idea. In their early success, Roxanne mentioned that they are not just profitable, but also the company is debt-free. It is very overwhelming because as stated in Exhibit A, for the past 7 years, Burt’s Bees have grew in sales from 1987-1993.. This is a very interesting matter because we all know that as of now, many of the new established businesses operates from alternative resources such as loans, etc. Roxanne said that she is so debt-averse and cash aware, so I can say that Roxanne’s personal beliefs in running a business is another tool that brought it to success, plus Burt who was her companion, the two were very idealistic for they give and take each other’s opinions.

5. What should Roxanne and Burt do, and why? •

Roxanne and Burt have to make tough decisions where their start-up business depends on. They have to take risks in order to have greater opportunities for their business. Moving the business has its advantage and disadvantages. In my own opinion, Roxanne and Burt should continue to move Burt’s Bees in North Carolina. This would give them

the chance to expand their business and make the opportunity worth it. Who would think that a simple experiment of Roxanne would boom, and I know that if they give it the chance, it would turn into a huge company. If they would remain in Maine, I know that they would gain profits in the short-run, but if they continue in South Carolina, the company would be gaining multi-millions and would grow. Even though they would be hiring skilled workers with high compensations and their business would generate automated, they would be saving more time, money and effort. If they want to make the business that they have started to last in the market, they should think positive enough in doing so. In this case, venture capital applies. With the help of venture capitalists, it would be easier for them to operate as one big company. The company would then be recognized in the whole world and would capture higher percentage in the market. If they want to retain the original product on handicrafts, why not hire those cheap laborers from Maine and just add salary to them so that the original product would still be there. It is possible though a bit hard. Being the founder o Burt’s Bees, Roxanne and Burt would possibly go for innovation, for we know that a business should be a cycle, it goes on and they should never let it down. So, the idea of moving would help the company to be a success, and for sure, they will make history. As it was stated, in venture capitalism, you have to think big enough.