Entrepreneurship and Small Business: Case of Clippy London - Essay Example

?Clippy London Contents Answer 2 3 Answer 3 7 References 12 Answer 2 Calypso Rose in 2004 at the age of 22 decided to launch her own fashionable customized bag. She borrowed ?2000 form her parents for making initial 250 bags. That was the day when clippy born. Calypso was graduated from a drama school on technical theatre course. She took a job I a television industry after her education but at that time the idea came to her mind about a see-through bags with the graphics of relatives, friends or family. Initially many people asked her where they can get that type of bags what Calypso thinking. That was the time when she realized that this bag can be popular product for people who loves innovative designing articles like cloths, umbrella, handbags, wallet, makeup bags, lamp shades etc. Clare, mother of Calypso also helped her with the business. Her first year turnover was ?180 000 and she became the London Business person of the year at the age of 22 (Burns, 2011). Calypso and her mother Clare chose to manufacture the bags from UK and use their house as the office. The reasons are: Working from home was advantageous cause their Calypso did not had to pay any rent for her office to anybody. Except that no extra electricity or internet bill there are flexible office time. She could able to work any time in a day and handle any matter whenever they arise without delay. And she got her mother’s help from home (Clippy London, 2013). She was worried that any big and established manufacturer in market can easily steal her idea or copy it so she had to make the sales fast and regular, to do that she needed the supply unit and manufacturing unit to be close. If the supply unit is thousands of miles away somewhere in china and she had import everything from there it would took couple of valuable days. Instead of that if that if both the unit in UK the orders can be more quickly handled. And once the business start and run smoothly the payment terms for business chain will be regular and spontaneous and it will help the cash flow for her business. An online directory namely Kelly’s online directory (Kelly Search, n.d.) helped her to find out a manufacturer from UK (Smith, 2010). Calypso was a first timer in business field and she had no experience in that domain. Also her volume of business was not very big it was precisely 250 bags only. So for 250 bags going to foreign country to search supplier and renting a separate office would have been more fancy for her cause she was not sure the idea of transparent and graphics bag would hit in the market or not. Her initial customers were family, relatives, friends and those people who appreciated her idea earlier. The official launch of the product was on 2004 during Christmas Fair in Olympia’s Spirit (Stylist.co.uk, n.d.). These three were the main reason of choosing UK as the place of manufacturing for calypso for her fashionable see through bag with customised designs. During start ups and initial growth period manufacturing unit of Clippy was at UK, there were some advantages as well as some disadvantages also. Advantages can be: If supply and manufacturing unit are nearby then time cycle from order of raw materials –delivery of them –and making finished items and delivering them to market become fast and regular. Communication between various members in supply and delivery chain is become easy and effective. In that respective if we look at Clippy’s initial days (start up and initial growth) it was quite expectable for such an innovative product. It was an innovative product no such see through bags with pockets and photos of family and friends on it was available previously in any market. It was an experiment for her to launch it in small scale in UK market from where she also got couple of encouragements from various fashion lovers. So it was like a gamble for her. So it was better to choose her home market rather than foreign market for manufacturing (Department for Business Innovation and Skills, 2012). Calypso did not have any experience as a businesswoman, a little knowledge about only her home market (UK market). So it would become not easy for her or for her mother to go a foreign market and select a supplier and maintain spontaneous delivery cycle. She produced fashionable products or we can call it impulse product. Buyers don’t need those products for living, if they liked they would have want them. So the life cycle of those products was very less. Very frequently the test of the customer and trend get shifted or changed. Stock clearance cycle for products had to be quite fast. Demand also was unpredicted for an innovative product. So to stay in the safe side it was better to produce it in her home country (Sherrie, 2011). The Disadvantages for choosing UK market as manufacturing place for the product can be: If Calypso imported raw materials from China then the manufacturing cost for the bag would have been reduced by couple of pounds and it would have boost the initial sells. Though initial 250 bags made by Clippy was sold very quickly. But it would have increase the profit margin for her. During 2008-09 recession she felt the need of going global cause UK market was not enough profitable at that time. The she decided to extend her services to Netherlands, Italy, France, Turkey, Japan etc. If she took the initiative earlier it would became much easier for her to handle it when time needed. The labour charge in UK is very high rather than developing countries. So shifting manufacturing unit to developing countries would have been profitable (Heath, 2012). So it is quite clear that choosing UK as its manufacturing unit it was Calypso’s right decision. Her most successful initial breakthrough to make Clippy an established brand was when Notting Hill boutique Coco Ribbon accepted her product to sell. And it was more productive when Helena Bonham Carter, Jamie Oliver and Jools Holland like celebrities used her brand. It got the ‘goody bag’ appreciation from Brit Awards and Orange Prize. In 2011 the company turn over grown to ?500 000. In 2010 Clippy had 40 products in its portfolio. Answer 3 In small business literature of a standard business start-ups cycle there are three stages. In these three stages the condition of the businesses are different. The below diagram is a standard concept and framework for any start-up small business (Claessens, Kose and Terrones, 2011). As a start up small business Clippy was also followed the same path. Starting from ?2000 in 2004 and reaching ?500 000 in 2009 with 250 independent boutique in UK and in 2010 it introduced to Japan and in 6months $45,000 orders. Source: https://theconversation.com/the-sad-state-of-the-venture-capital-industry-7244 Initial Stage: At this stage the entrepreneur come with a business idea which has to be unique and value added. She/he needs to find out an angel investor for her/his idea to implement. The angel investor can be friends or parents or relatives who have a prolonged amount of business experience. That person mostly comes out as a retired top management executive of a big organisation. That person know that his investment can be a total failure if business does not work out but. (Stylist.co.uk. n.d.)Here the angel investor takes the whole risk and it’s just like gamble. He knows that in first 6 months there will be no positive return but it will be a loss but they judge it by their experience they only look at the person who comes with the business idea not the idea. If the person has the ability then he can make success out of any business proposal no matter how unfruitful that is. If the person is not right the business will fall no matter how innovative and demanded product she/he produces. In Clippy’s case here Calypso got her first investment of ?2000 from her parents and her mother helped her to manage the business. So here the angel investor is his parents. Angel investor control the business until and unless the business reach the breakeven point that means when it reaches the Zero loss condition and about to see the face of the profit angel investor sale it to the venture capitalist. Growth Stage: When angel investor realizes the business is about to enter into profit stage he sell it to the venture capitalist (VC). Venture capitalist is a person who is very professional and invests in various no. of different types of businesses. They know how to do business and for rapid growth what are the things necessary. In Clippy’s case here Coco Ribbon was the first to approach to them and sold their product in Coco’s boutique (Hirschkorn, 2009). We can divide this stage in two parameters one can be only growth and another will be saturation. Venture capitalist take the full advantage of the growth stage and make couple of times in return of investment and then when the business reaches to a saturation stage, that means from where they see no more rapid growth are possible or no. of competitors are come into the market with similar offerings they will advice the entrepreneur to sell the business to any big player of the market or go for IPO (Initial Public Offering). This depends on Venture capitalist decision. In Clippy’s case still it does not reaches to that point. It is still in growth stage because Calypso is still trying to search for new market and they still enhancing their product portfolio. Final Stage: In this stage VC decide to go for next step with that business by seeing its prosperity. When they feel no more huge return on investment is possible they either sell to the big company or go for public offerings. That is also called secondary offerings. Sometimes when the VC feels that company is getting bigger and bigger and it’s not possible for him to control it they break the company into many shares and some of them put it on share market in a certain price for public. Sometime to grow into the market or launch the product into previously untapped or unattended market or may be increase the production or capability of current production it goes for secondary offerings to collect money from share holders and invest it into the organization. The time it goes for public offerings the company is no more an entrepreneur’s own business, the share holders also became equally responsible for any decision been taken by the management. A separate board of director has been form where there will be people from share holders, owner and senior level management and also separate directors who do not belong to the share holder or owner side. Clippy is in very much growth stage. They still need to work on their market penetration, market share and product port folio. Though, Clippy has already increased its turn over into several times (in 2009 it was ?500 000). It also increasing its product portfolio almost every years (in 2010 it was 40). And also the range of the product is very wide (its starts from ?10 and ?25products are also available). By Passport to Export, Tradeshow Access Programme Exhibition the company is handling the distributors among Netherland, Italy and turkey. They also signed up to Gateway to Global Growth programme and enter into Japan in 2010. Now Clippy is available almost all over the Europe. Calypso was very much excited during her Paris store opening. They commissioned an OMIS to obtain market intelligence and it helped them to introduce entering key partners into the market. Calypso did 15 meetings to make a huge successful international venture till date was in Japan. They got $45,000 orders from Japan in just six months and signed a distribution contract with the retail stores of Japan for their products stocking and distribution (Archive, n.d.). According to Calypso ‘In the long term, it would be great to have a lifestyle Brand and then sell the company’. There are some tips for new start up business people from Calyso are: ‘Stay positive and have faith in your product. Keep your costs to a minimum. If you can work from home and do your own PR in The beginning this will give you the cash to develop the product. Vary your markets. Think about how your product could ?t into different markets. Clippykit works for retail, the promotions industry and education. Optimise your website. Keep driving customers to your website using PR and Marketing and make your site sticky. It’s your portal to world markets. ‘Don’t expect it (your business) to be a short cut to prosperity. Pro?t made equals Business development not personal wages.’ References Burns, P. 2011. Entrepreneurship and Small Business (3rd Ed) Palgrave Macmillan. Available at < http://www.palgrave.com/business/burnsentrepreneurship/students/cases/clippy.pdf> [Accessed 11th Nov 2013] Clippy London. 2013. ABOUT. Available at < http://www.clippykitlondon.co.uk/about> [Accessed 11th Nov 2013] Kelly Search. n.d. Top Industry Categories. Available at < http://www.kellysearch.co.uk/> [Accessed 11th Nov 2013] Stylist.co.uk. n.d. WHAT A WAY TO MAKE A LIVING. Available at < http://www.stylist.co.uk/stylist-network/readers-column-what-a-way-to-make-a-living> [Accessed 11th Nov 2013] Department for Business Innovation and Skills. 2012. UK trade performance across markets and sectors. Available at < https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/32475/12-579-uk-trade-performance-markets-and-sectors.pdf> [Accessed 11th Nov 2013] Sherrie. 2011. Beauty in the Mirror. Available at < http://www.beautyinthemirror.co.uk/2011/02/clippy-london.html> [Accessed 11th Nov 2013] Heath, A. 2012. Surging labour costs are keeping UK unemployment. City A.M. Available at < http://www.cityam.com/article/surging-labour-costs-are-keeping-uk-unemployment-high> [Accessed 11th Nov 2013] Claessens, S. Kose, M. and Terrones, M. 2011. Financial Cycles: What? How? When? International Monetary Fund. Available at < http://www.imf.org/external/pubs/ft/wp/2011/wp1176.pdf> [Accessed 11th Nov 2013] Hirschkorn, J. 2009. Clippykit goes from bags to riches. The Telegraph. Available at < http://www.telegraph.co.uk/finance/yourbusiness/startingout/4386199/Clippykit-goes-from-bags-to-riches.html> [Accessed 11th Nov 2013] Archive, n.d. CLIPPYKITLONDON.CO.UK. Available at < http://web-archive-uk.com/uk/c/clippykitlondon.co.uk/2012-12-05_848227_98/Calypso_Tells_all_Clippy_London_blog/> [Accessed 11th Nov 2013] Smith, P. 2010. Clippy looks to bag a slice of the Japanese market. Available at < http://www.telegraph.co.uk/finance/businessclub/sales/7541463/Clippy-looks-to-bag-a-slice-of-the-Japanese-market.html> [Accessed 11th Nov 2013] Read More