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In Partial Fulfillment of the Requirements

FM 009
Venture Capital


Submitted to:
Ms. Leilanie Jane T. Mateo

Submitted by:
Claire Cimatu

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

• 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.