Ruth M.

Owades Ruth Owades was the Director of Marketing at Avion Group, which was a diversified mail order retail company. After working for few years at Avion, she saw an opportunity in selling exotic gardening equipment and recommended gardening catalog to the management. The management decided not to invest in the opportunity, primarily due to lack of consensus among the key management. Ruth believed that the opportunity was great and decided to pursue it on her own. Based on her research she would need at least $250,000 for the venture. She managed to raise the $150,000 from private investors in addition to $50,000 of her own funds. Opportunity The opportunity looks attractive because of the following reasons: The new venture is targeting a niche market that has not been addressed by any others in the market. The target segment includes gardeners who have the buying power, interest to show off their gardens and history of buying the products using the catalog. The research has indicated that there is no competition in this target market.

Critical Success Factors Critical Success Factors (CSFs) are the factors or elements that are necessary for an organization to be successful. For a mail order company to be successful, they would need to retain and increase their customer r base, increase the response rate at which customers place orders. The critical success factors for a mail order industry include: Capital Ruth estimated that she would need approximately $250,000 to start with $400,000 customers. Ruth is investing $50,000 of her own funds and managed to obtain $150,000 of private financing in exchange for equity. The private investors also committed to future investment if required based on groups judgment. The table below shows all the expenses that Ruth may incur prior to start mailing out the catalogs. She would need approximately $200,000 capital to get started. Based on this estimate and the available investment, Ruth has enough funds to get start on her new venture. Customer Service Timely delivery of the products Products in the catalog Supplier and Vendor Network

Expense The Catalog Mailer Addresses, need 10% more than the catalog number Office Space (Rent / month) Warehouse UPS Phone Service Person for phone orders Credit Card Charges Bad Checks/Bad Credit Cards Office Furniture (Approximate) Mail, post office fee for early pickup Vendors and Inventory Supplies: Cartons, Packing material, tape, labels The Catalog Photographer ($/hour) Designer ($/hour) Order form designer ($/hour) Printer Extra Resource for Phone Orders and other help ($/hour) Miscellaneous Total Capital Needed

Unit Price $0.25 $0.07 $1,500 $1.65 $2,000 $500 $6

Quantity 400,000 440000 6 12000 1 1 960

Total $100,000.00 $30,800.00 $9,000.00 $19,800.00 $2,000.00 $500.00 $5,760.00 $500 $500 $1,000 $300 $1,000 $2,000 $2,400 $3,200 $600 $10,000 $1600 $10,000 $200,960.00

$30 $40 $30 $10,000 $10

80 80 20 1 160

The conservative estimates on sales (2% response rate on 400,000 catalogs at $30 per average order) would result in $240,000 of revenue for the first season, which means the company could be profitable by the end of the first couple of seasons itself. Conclusion The idea of gardening catalog presents a real business opportunity for Ruth and she should pursue the opportunity as she has the required resources (capital and the network) to do so. I believe she was successful in building a resourceful network through her connections made while at Avion, HBS and the connections are willing to help to make the new venture successful.