Understanding Enterprise

Entrepreneurship and Small Business, fourth edition

by Simon Bridge and Ken O'Neill

Case study: chapter 11

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The following case study outlines the experience of Patricia starting up her own business designing and producing Irish dancing costumes. Although she has been involved in the industry for a number of years as both an instructor and national champion herself, she has made an appointment with her local enterprise agency in order to get some general advice on what she should be doing before she starts trading. Compare the outlooks of the two women in terms of their attitude, mindset, assumptions of the environment, starting points and the resources that should be applied to the business as highlighted by Bridge and Hegarty
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Having retired from competitions, Patricia was keen to stay involved in her passion that was Irish dancing. She is currently working full-time for a garment alteration business which provides a general service to the public. In her spare time she designs and makes Irish dancing dresses for members of her class and after receiving widespread admiration for her work at a recent nation-wide competition, has been approached by a number of dancing schools interested in having custom-made dresses for their dancers. The dresses however are needed in a hurry as they are planning a tour of the USA and so in order to explore the opportunity of going into business for herself, she makes an appointment to met with Sharon, a business services officer at her nearest local enterprise agency. Sharon, a graduate in business studies, remembers the emphasis placed on having a detailed business plan in order to control and grow the enterprise. She believes that it is the foundation upon which most successful businesses are built and believes it acts as a compass to guide entrepreneurs on their way to reaching their goals.

The two women meet for the first time and Sharon begins by asking Patricia where she is in terms of her business plan. Patricia responds by pointing out that actually she had not developed a formal plan but due to her experience she is fully aware of the costing involved and although the work is labour intensive, the price that the market is willing to pay comfortably covers the costs and provides an attractive profit as well. Sharon agrees that this sounds like a viable opportunity - however she wants to at least discuss a basic business plan with her which can be adopted or ignored at the end of the meeting to which Patricia agrees. In terms of marketing the company, Sharon suggests that Patricia prepares a portfolio of her work and targets all the major dance schools in the country in order to raise awareness and grow her client base beyond her more immediate networks. This does not appeal to the entrepreneur. She highlights the fact that in order to prepare a professional-looking portfolio of her work, she would have to hire a photographer and spend a significant amount of money on designing and distributing the promotional material. Although she did have savings that she was willing to invest in the business for materials, at this stage she was unwilling to take a loan from the bank which she saw as unnecessary.

Rather than undertaking a mass marketing campaign, Patricia had planned to construct a basic website that would display her work and would ask her colleagues to distribute her business cards, website included, to potential customers they will meet on their tour of the US. The Irish-American community have always maintained an interest in the pastime and with many studios and community centres offering classes, there was a significant market to tap. This was also because of the perceived status symbol that many Americans attached to having a dress imported from Ireland combined with the fact that few, if any, provided the service in the USA. Sharon was keen to know whether or not Patricia would have the capacity to meet the demand locally and from America if indeed her plan was successful. She believed that this is a potential obstacle that could be minimised if formal plans were made to rent premises with adequate space and to possibly lease equipment that would reduce the labour intensity of the dress-making process. There was an element of agreement from Patricia however she said that she would rather react to these dilemmas as and when they arose rather than spend too much time planning for hypothetical situations instead of actual running the business.

Sharon wanted to know if it would be possible to produce an inventory of completed dresses that could be altered on demand for each client. This way Patricia would be able to produce an average number of dresses per month in anticipation of sales which would potentially help her when demand builds up over busy periods, such as St Patrick's Day, and allow her to maximize sales. Although a good idea in theory, the problem is that this particular market is not as predictable as Patricia well knows. She is astutely aware of the fact that there are many factors, mainly economic ones, which determine the demand for new dresses. Changing tastes in fashion also make the production of any templates unrealistic as it could simply result in wasted time and material. To combat this relatively unpredictable environment, she believes that she could offer a service that would alter existing dresses in order to change the style or colour although she is certain that this is only one potential alternative and that others would become clearer to her depending on the exact market conditions at the time.

At this stage it was clear that both women had different ideas about exactly what the way forward was. They both agreed that in light of the opportunity to design the dresses for the US tour, the sooner Patricia started the better. This said Sharon was still advocating the production of a plan that would at least let Patricia see what resources she needed and how she could go about securing funding for them. However, having had years of experience as a seamstress and dancer, Patricia was confident that she had all the resources necessary and was determined to use the ingredients she had to produce a successful business that would both support her lifestyle and allow her to be involved in her passion.

Compare the outlooks of Patricia and Sharon in terms of their attitude, mindset, assumptions of the environment, starting points and the resources that should be applied to the business as highlighted by Bridge and Hegarty.

Suggested solution

Attitude

  • Rather than try to plan to far into the future, Patricia embraces the belief that reality is in fact uncertain and that efforts to try and predict the future are a waste of time. This is not to say that she is planning on operating in total chaos. She has already a well-developed network within the industry and is well aware of the ever changing demands of the market. She realises the importance of proactively monitoring the environment and responding accordingly to any opportunities that may present themselves.
  • This attitude is not shared by Sharon who sees the business plan as the course to be set for the ship. This is not to say that she is advocating a completely unquestioning loyalty to the business plan but would prefer to follow the plan, monitor actual progress with the projections and change course if necessary.

Mindset encouraged

  • Here again there is a clear contrast between the two. Patricia is eager to explore opportunities that may be available in the US. If successful this would open up a potentially vast market where Irish dancing has remained a popular activity among the significantly large Irish-American community.
  • The business plan approach may not have necessarily picked up on this opportunity. Again that is not to say that the contents of the plan are unchangeable, however the approach does encourage following a predetermined path that may promote a blinkered view in terms of opportunities in the market. It could well be that by successfully targeting local dance schools Patricia could be judged a success while possibly missing a chance to capitalize on a greater opportunity.

Environment assumed

  • Although Patricia is certainly not against planning for the future, she has much experience in the industry and is aware of the unpredictable nature of demand. Rather than try to predict what the future will bring she is more concerned with trying to be as flexible as possible in order to respond to what comes her way.
  • Sharon is counting on the environment being predictable and hence plans and contingency plans can and should be formally set in place.

Starting point and where to start

  • Patricia was eager to get started and was unwilling to wait in order to prepare a detailed business plan that would need, more than likely, to be altered numerous times. She had been presented with an immediate opportunity and had the equipment and materials necessary to take advantage of it.
  • While recognising the need to start soon, Sharon argued that before jumping in it would be wise to plan for the future of the business and have in place the adequate facilities and equipment in the anticipation of the business growing at an estimated rate. She was not encouraging Patricia to overstretch herself financially but rather was eager for her to know exactly what she needed based on researching the market.

Resources applied

  • Here it is very clear to see the differences in opinion of the two individuals. When questioned about how she planned to grow the business, Patricia was adamant that the best way would be to monitor her networks in the market and respond to any changing needs and demands. Establishing herself in the marketplace and survival were the more immediate goals.
  • The business plan approach would suggest that the entrepreneur should invest and/or find the resources that the business plan says are needed and justified by the anticipated return.