18 Pages Posted: 21 Oct 2008
This case describes the process that entrepreneur Paul Farrow went through to establish his kayak company between 1992 and 1996. After being laid off from a more traditional corporate position, Farrow came across an idea that suited his business skills, experience, and values. The case chronicles the steps he took to be the first in the industry to design and produce an inexpensive, high-performance recreational kayak from recycled plastic materials. Key to Walden Paddlers' $1-million sales in 1995 was the company's ability to forge close alliances with key suppliers and customers while keeping fixed costs down by managing a virtual corporation.
In late 1995, Paul Farrow, at age 45, could look back with satisfaction and pleasure at the path his company, Walden Paddlers, had traversed in the three years since he first wrote his business plan. The company had produced its first kayak, made from recycled plastic milk bottles, in April 1993. Since then, Walden Paddlers had sold over 5,000 boats. Three models had been successfully designed and built, and then had been sold through leading national retailers to consumers who were looking for good value. Although competition was growing, the market yet to be reached was significant. With over $ 1 million in sales and a comfortable cash flow, Farrow, along with his partner Dale Vetter, was ready to take the company in a new direction. But the precise course was not entirely clear.
For the past few months, Farrow had considered alternative products, possible new markets, capital requirements, the implications for growth, and whether the company could continue as a two-person virtual corporation through the next stage. One option was to stay the course, focusing on the low end of the kayak market and producing a limited number of models. A second path was to expand aggressively into more kayak segments, moving up from recreational boats all the way to white-water and sea-going kayaks. A third option was to diversify into other recreational products for outdoor use made of recycled plastics. Farrow and Vetter had also looked at recycled products targeted at automotive and footwear markets. Each direction had its pluses and minuses, and Farrow needed to make some commitments soon. Looking back over the past three years, he commented, “I hate to think what I might be doing if I hadn't started the business. I'd probably be overweight, working in an office somewhere, constantly bored or at least anguished.” He now faced some tough decisions and if these questions caused anguish, at least it was the right kind of anguish. His business was already successful, but what should come next?
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Keywords: environment, start-up, customer relations, entrepreneurial finance, entrepreneurial management, entrepreneurship, small business, supplier relations, alliances
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