The Entrepreneurship Case Study (individual work)
Each student should follow a small business that was started by the current
owner/manager. It can be your current employer, or your parent’s business. Your key
task is to talk to the founder(s) and learn about how they have founded and managed
their businesses. Use your network of friends, neighbors, relatives and previous
employment to find a company willing to participate. Alternatively, select a company
that you would like to work for in the future. The opportunity to network and get your
foot in the door may help you accomplish your goals.
The following will be some of the questions that you can ask the owners about. But
you are not limited to them. Remember you are learning and so you are encouraged to
ask more questions that you are interested and that may be helpful when you start or
run your businesses.
1. Basic information of the business:
You should ask basic information about the business, such as industry (retailing,
restaurant, and so on), sales, profits, number of employees, age of the company and
the owner (for this, you can have a range, such as 40-50), educational background,
time they have been in this country, if any parent owned a business before and any
other interesting stories that they might want to share. Sales and profits can be hard to
get. For these issues, you can ask for a range, such as between $50,000 and $100,000,
or above 1 million dollars. If that is not possible, do include the number of employees.
2. Entrepreneurship intention:
Why did they start the business? What opportunity identification sequence was used
for the initial launching of the business?
What form of business does the company choose? Why?
Provide a time line for the venture beginning with when the idea was first formed.
How did the idea evolve over time, or did it?
3. Beginning considerations:
Did the company write a business plan? If no, why? If yes, how did they do it? What
was the biggest headache while they crafted their plan?
Who are the key customers? How did they choose that group?
Describe the external environment for the venture. Who are the major competitors?
What is the labor market like? Are they any major legal or regulatory restrictions?
How rapidly is technology changing the way the company does business?
Describe any ethical issues or problems the management team encountered along the
way. How were these problems resolved?
Describe the exit or harvesting strategy of the entrepreneurs. Will the venture be
harvested? Do the entrepreneurs have an exit strategy in place?
4. Marketing and financial considerations:
What is the marketing strategy? What is the unique selling proposition?
Ask him/her to describe one marketing trick that he/she used.
Do they have a balance sheet and an income statement? Do they have the projected
financial statements? If yes, ask them how they did them. If no, ask them why they
did not have them.
Did they ever have cash flow problems? If yes, how did they deal with it? If no, how
did they do to prevent that from happening?
How did they price their products/services?
What kinds of advertising did they choose? Why did they do so? Ask them to show a
piece of their advertising that they are very proud of (in print or video or audio).
Do they have their own website? Did the website help and how?
5. Sources of Funds:
When they started up, how did they finance their businesses? Did the founders use
debt or equity financing? Were there multiple levels of financing?
Where do they do their businesses? How did they choose that place?
What is their organizational culture? Ask them for one trick that they used to motivate
their workers.
Conclusion question (required):
Chart annual sales since the venture began. Describe key events in the development of
the venture with reference to the time line. Include the following components:
1. Major resources available at founding and acquired throughout the life
of the venture
2. Major changes in the products or services offered
3. The addition or termination of key partners or employees (pay close
attention to the addition or deletion of members of the management
team)
4. Major technological shifts and breakthroughs
5. Major changes in markets
Finally, you must turn in a written report of this Entrepreneurship Case Study.
The length of the case write-up is up to you. High quality reports in the past have
varied between 8 pages. The birth and subsequent growth of entrepreneurial ventures
are frequently an exciting and life changing event for the people involved. The case
report should fully capture this experience.
Entrepreneur Case Study
Introduction:
This entrepreneurship case study will be over my father Roberto Mora SR who has been
an entrepreneur for the majority of his life. He started working at a car audio installation/
window tinting business and eventually started his own window tinting business, which was his
first business named Solar Control Window tinting. After years of sweating and owning a
business in the service market he decided to open up The Peace Pipe smoke shop in 2004 which
is a retail business and will be the business that i focus on him owning . This case study will
focus on why Roberto decided to start his own business, How he did it, and what it has become
through the years. An overview of The Peace Pipe will be provided and explained to give an idea
of what the business is and its performance. I will analyze Roberto’s entrepreneurship intentions,
which explains why he started the business. Next an analysis of his beginning considerations,
gives information of all the different aspects thought of before starting the business. Marketing
and financial considerations is the next step of my case study, which details how he markets his
business and the management of finances and pricing of products. The next part of my case study
will deal with the sources of funds, where the money to start the business came from and how he
decided the location and organizational culture. The final issue in the case study will deal with
major changes in the market, resources, products sold, employees/partners and technology of
The Peace Pipe.
Overview of the business:
The Peace Pipe is a retail store in the smoke shop industry. The shop shop industry deals
from glass smoking pipes all the way to erotic novelties, it is under constant change from year to
year and demands can change from one second to the next. Customers of smoke shop businesses
are what keeps the industry alive it is not like other industries that the government backs up and
bails out, so all the producers in the smoke shop industry must really tailor their products to
fulfill their customer’s needs. The owner tells me that 1.1 million a year in revenue is made with
his businesses, he does not focus on how much profits are made as long as all the bills are paid
he's happy with how things are going. The Peace Pipe has 4 locations the first one opened in
mcallen on ware rd, then mission on conway ave, then weslaco on old 83 and finally the second
location in mcallen on 10th st., the owner says he will open more in the future. The stores are all
ran by the boss but he has his 6 workers that share shifts working at all 4 locations. The 6
workers are all males and are close friends to my dad and one of them is even my cousin, their
names are George, Rolando, Mark, Ramiro, Eric, and Tony they each enjoy work and are paid
cash every weekend depending on how many days they worked. The owner Roberto Mora SR is
41 years old and has had The Peace Pipe open going on 13 years since 2004. Roberto was born
and raised in the RGV, also got his GED in 1993 from mission high school. He used to own a
window tinting business named Solar Control Window Tinting for 5 years before opening The
Peace Pipe. Robert could have never imagined being this successful in life based on where he
came from.
Analysis of entrepreneurship intention:
Roberto started The Peace Pipe because he wanted to challenge himself in life and
decided a smoke shop was the best way to do so. He wanted to take a big risk that if successful
would have impressive returns. This business owner is not afraid of risk he ditched his successful
window tinting business of 5 years, to gamble all his money in a business industry that he is
unfamiliar with. Roberto noticed that there is a abundance of smokers in the valley, and he
himself would shop at the smoke shops that were opened before The Peace Pipe and was not
impressed with their selection or service. The large smoking community is great since it gives
him a large customer base that has a variety of demands, and the mediocre smoke shops that
Roberto had examined are not able or do not care to fulfill all the needs of RGV smoke shop
customers. Roberto believed that he could open a business that would cater to all the smokers
needs and serve as a trend setter by offering the latest products and knowledge to the smoke shop
community. The opportunity to take a large share of the smoke shop market in the RGV was
what Roberto was attracted to and made him launch the business. Roberto knew he could adapt
and establish his smoke shop as one of the best in the RGV through listening to his customers
demands and staying up to date with the smoke shop industry.
The Peace pipe is a retail smoke shop that focuses on tobacco products and accessories as
well as adult novelties. They choose to be a retail smoke shop shop that focusses on the trends
and new products that come into the industry like glass pipes, vaporizers, blunts, grinders etc.
versus traditional smoke shops that focus solely on cigars,cigarettes, lighters, loose tobacco.
They want to satisfy the new age smokers and attract all the new generations that smoke that is
only possible by offering cutting edge products that are new and exciting that cannot be found at
your regular smoke shops or tobacco stores. Many people wonder why they sell adult novelties
but there is a large demand for them especially with the older crowd of customers, male
enhancement and toys are a big deal in the RGV. The Peace Pipe does retail instead of wholesale
due to the fact that they want to sell products for as much possible to make the most profit, they
do not want to sit on tons and tons of inventory that they have to worry about selling. The Peace
Pipe wants to be up close to their customers and know exactly what they are thinking, when you
do wholesale you only deal with other retailers instead of the actual customers. Retail is the way
to go when owning a small business you get to deal with individuals versus companies and you
get to create life long relationships with clients that mean a whole lot more than just profits.
Roberto did not take much time starting the business he wanted to jump into the market
before it becomes flooded to establish The Peace Pipe as the go to shop in the RGV for all your
smoke shop and adult needs. Once a market becomes flooded with much competition it is bad for
business and usually leads to price wars which make it worse on everyone operating in the same
market. Here is a short time line on how he started the business, in 2003 Roberto began going to
all the smoke shops asking what he had to do to open up a similar business. Then after a year in
may 2004 he opened The Peace pipe in Mcallen,Tx with minimal merchandise, then 2 years later
opened up the location in Mission,Tx. The two stores started making serious money for Roberto
and led him to now having 4 locations across 3 cities in the RGV. He has grown the business to
everything he wanted them to be but their is always room for improvement which he understands
and continues to work at day in and day out to ever expand this business for his family’s future.
Beginning considerations:
Most businesses create a business plan before actually opening, Roberto did not create
one when opening up The Peace Pipe and it hasn't effected him since. Rob takes business on a
day to day basis, there is no reason to try and plan everything out as long as money is coming in
business is doing just fine. Clearly Rob needs to implement a business plan in the future, any
business can benefit from creating a business plan, even though business is doing above average
there is always room for improvement. The main customers are 18-70 year olds they buy a
variety of products from tobacco related items to erotic novelties and even vitamins and cream
chargers. They do not discriminate when attracting customers they accept any race or gender
with open arms . Being open minded is the best way to do business it gives you more
opportunities to gain customers from all different demographics and in turn makes more profits.
When Rob first started the business there wasn't much competition in the shop shop
businesses in the RGV, but now there are a great amount of competitors with growing numbers
as the years go by. The main competitors of The Peace Pipe are Pow Wow, Puff and Stuff, Good
Times, Pokey’s Planet and Free Spirits they all have locations in the same cities and have been
around for a good while. Rob assures me that the other shops do not compare to The Peace
Pipe’s inventory. The labor market for The Peace Pipe is mainly people that Robert knows
personally that have good knowledge about the smoke shop industry and have good backgrounds
that show they can be trusted to perform. Robert could benefit from searching for potential job
candidates other than just people he knows, it could bring in more diverse employees that can
benefit the company.
There is not much restrictions to starting your own smoke shop business, Robert tells me
that everything required can be easily obtained. All the permits required to sell tobacco products
and to just open a business are not that expensive and could be easily paid by a business owner.
The one major law they must follow when conducting business is that customers must be 18
years and older, the state of Texas is very strict when enforcing tobacco laws and constantly tests
tobacco retailers. One trick the state of Texas does is by sending in under age children to ensure
The Peace Pipe checks for proper identification that each of their customers are 18 years of age
or older. Rob also tells me that Technology is constantly changing the products and trends in the
smoke shop industry. Every week new tech is brought into the smoke shop industry and has
smoke shop owners constantly ordering more and more inventory to provide all the newest
products. In a industry as dynamic as this one a business owner must be open to new ideas and
methods to ensure they do not become stale and start losing market share.
Rob mentioned that his management team only encountered a ethical problem once and
that it involved the state of Texas for not giving the correct knowledge on how taxes were
supposed to be conducted. He is lucky his business has not faced much ethical problems, but this
owner must never let his guard down and avoid ethical issues. This entrepreneur does not have a
harvesting or exit strategy, he believes this business will continue to thrive even after he's gone
through his family. Rob thinks its very important for his family to be taken care of and he makes
sure that there is always a good amount of inventory. He keeps a large inventory so he doesn't
have to worry if money runs out and they can sell the inventory in the mean time until business
picks back up.
Marketing and financial considerations:
The Peace Pipe uses many methods for their marketing strategy, they use Instagram,
Facebook, radio commercials and word of mouth to distribute information about the business.
Social media and radio time does lead to reaching many potential customers, however it may not
spark the interest in customers that word of mouth can, hearing something over the radio or
through social media does not mean you will actually go to the business advertising. Word of
mouth is special since it usually involves someone telling the people they know about The Peace
Pipe, when people hear about businesses from friends and family in a positive way they will
most likely pay a visit to that business because they trust the person that is speaking. One trick
Robert uses on his customers is to give away shirts, keychains, coozies, with peace pipe graphics
that contain the store locations and phone numbers as well as free giveaways, that way the
customers feel good about their visit to the store and plan on making it their go to spot for their
smoke shop needs. These marketing methods are a great way to reach the masses and add more
publicity to the business and in turn will bring in more profits and happy customers.
The only financial statement Robert worry about each year is the income statement. The
only reason he even has the income statement is for taxes which are due each year. The one thing
Robert does do that is pretty smart is to keep track of the revenues of each store on a daily basis
and document them for each individual day, this information is important when trying to track
spending trends of our customers year in and year out. When patterns are found in the revenue
records it helps Robert prepare for the next year as he has an idea of what to expect with past
information, it also serves as a way to ensure your on track with last years sales. When current
sales are not on par with past sales information it means the company is having declining sales.
Robert’s gathering of each stores daily revenue records allows him to pinpoint which store is
underperforming and needs to be considered for major changes or closing to try business else
where. It also lets Robert clarify which stores are performing well or above average to send them
more inventory or to give the employees bonuses for their excellent performance. Robert also
does not keep any major financial statements besides a income statement, due to the fact that he
has never created a balance sheet or cash flows statement, he does all the financials based on
street smarts and understanding what must be bought and how much money is on hand. This
business never has cash flow problems, the focus of spending is only on what is needed at the
business and what can be afforded, overspending is kept to a minimum and stores are always
kept full to prevent from having to make huge orders to fill an empty store. Whatever cannot be
paid with cash or checks is charged to the owners credit cards which serves as a huge benefit, the
ability to spend money you don't currently have gives you that many more chances to buy
inventory and makes lots of profits. Credit cards may be charged at the beginning of the month,
however Robert believes in his business to make the money back before the end of the month
and pay the creditors back, a process which has always served him well and keeps him in
business.
Rob attempts to sell all his products on a 3x mark up price if his cost is $5 he will try to
sell the product usually for $15, this method is smart since 1/3 of the price pays for the products
cost and the other 2/3 of the price is all profit. The large mark up on the majority of products is
also useful since it gives you room to haggle with customers if they are hesitant on buying, the
retail price he charges can be lowered and the customers feels that much better about the
purchase since they paid lower than the tagged price. Everyone would wish this mark up strategy
would work on every product but it doesn't not even for Rob for example he sells a 5 pack of
blunts for $1 and the cost is around 50 cents, a 24 pack of cream chargers costs him $5 and he
only sells them for $10. Products that do not have a large profit margin are only kept in store if
they are popular and have a very short turnover time, even though these products do not produce
much profit since they sell in such large numbers it creates a large amount of the businesses
revenue. The variety of products with their different profit margins add up whether he is making
3 times as much as he paid or not it allows him to stay in business and live comfortably.
The Peace Pipe depends on a diverse advertising plan that consists of business cards,
radio commercials, social media, search engine results and large signs at each businesses
location. The Peace Pipe has large signs at each location to attract people that are driving nearby
to stop and check out the store, the signs have the stores name and phone number information as
well as a small list of products we offer. The business cards are handed out to potential
customers as well as current customer, each card has the information for each location as well as
products we offer, so that they are reminded that we have multiple locations and to help spread
information about the store. Radio commercial time is paid by Robert to play Peace Pipe
commercials on Wild 104.1 a popular local hip hop radio station, he does this in hopes of people
hearing the commercial and going to the stores to become customers. Social media comes in to
play with advertising through Facebook and Instagram, these are essential in reaching a large
number of potential customers whether local or around the U.S, not to mention that social media
is popular with all generations and is used by all the demographics. Social media allows The
Peace Pipe to reach a greater number of customers without having to pay money since they are
free to use. The Peace Pipe also gains advertisement through search engine results whenever
someone searches smoke shops in the RGV they are included in the top of the results, this helps
since majority of people use search engines to search for businesses. A website was recently
created for The Peace Pipe (peacepipergv.com) and it includes virtual tours of each store’s
location as well as information about the business and the products they sell. The website helps
in that if anyone is ever curious about the business they can visit the website and get all the
information they need to pay a visit to one of the stores locations, and since they offer a virtual
tour customers already know what to expect before making a trip over. Advertisement is key to
this business’s success and will continue to influence the popularity as well as overall
performance of the business for years to come.
Analysis of sources of funds and conclusion:
When Robert originally started The Peace Pipe he had a partner that went half and half
with him on the business venture. Robert used money he had saved from his window tinting
company as well as a loan from his uncle to go half on the business. Many people believe
partnering with some one will make business better but it doesn’t Robert bought off his partner
after 2 years of business to solely own The Peace Pipe. Robert did technically use equity
financing and debt financing when starting the business. When he went half and half with his
former partner they each were going to own 50% of the company which meant half of the
business was being funded by the partner. With the loan he received from his uncle that was debt
financing since he only had to pay his uncle back the money and not give him any percentage of
the company. When looking back am sure Robert would of not decided to be partners with the
person who's name i cannot mention, since he ended up buying him out anyways.
When opening locations of The Peace Pipe Robert is very picky about where he will
open. He wants his stores to be located near areas that get a lot of traffic and are also near retail
areas. When positioning businesses near areas with lots commerce it is great since it gives his
businesses that much more of a chance to attract patrons to stop by and possibly make purchases,
it serves as another form of advertising since many people will see the business. Robert not only
wants his business locations to be near people but to be reasonably priced on rent as well. When
finding the perfect price to rent retail space for its important to take into consideration how much
of the revenue will be spent on rent, the higher the rent the less profits will be available. Robert
currently rents 3 of his locations, but he owns the location on ware rd in mcallen, which is also
one of the stores that makes the most revenue and has the best inventory since it is the
headquarters of The Peace Pipe. Having multiple locations is key to reaching the maximum
potential of your business, you are able to makes sales to many more people versus just 1
physical location.
The organization culture at The Peace Pipe is friendly and welcome to accept any person.
Employees are treated like friends and are not made felt like worthless pawns to generate
revenue. The boss and workers are always joking around and have a good time, they drink beer
together after 5PM to take the edge off and relax at work. However don't be fooled employees
know that the boss is in charge and whatever he says must be understood and accomplished in
order to keep their jobs. Once employees begin to slack and take their jobs for granted they are
kept under close watch in consideration to be fired or given less hours to work. For the most part
everyone is happy and problems rarely raise due to the owner any incompetencies are performed
by the employees are are quickly fixed so that they do not affect business performance. This type
of culture leaves space for employees to take advantage of the fact the owner isn't strict, could
lead to employees slacking doing the minimum to get their pay checks. To avoid employees not
doing all their duties Roberto pays all his workers at the end of every week in cash, in hopes that
they will work hard since they get paid each week. Employees are also given the chance each
day to meet a certain quota at each store to be given a bonus of $50 just for the single day, also
serves as a motivator for employees to make more sales and generate more revenue for the
businesses. The organizational culture is good but not perfect or great a policy must be set up in
the future with rules so employees know exactly was is expected of them. When employees
know what their exact duties and responsibilities are they will perform more effectively to
accomplish them and impress management.
Timeline
2003: Robert prepares to open business with a loan from his uncle and money he saved, as well
as a partner splitting the business with him
2004: First year The Peace Pipe is open for business, with their home store located on Ware rd in
Mcallen, Texas
2006: Robert buys off his partner to solely own the business, due to him not having the same
vision of the company, the partner was also incarcerated which gave Robert even more of a
reason to sole own the business. The Peace Pipe in Mission, Texas is first opened and is one of
the few smoke shops in mission meaning a great amount of profit can be made.
2008: The Peace Pipe in weslaco is opened
2009: The peace pipe in Penitas, Texas is opened. The Peace pipes starts selling a product called
herbal incense that is an instant hit and brings in tons of profits, these products are later to be
know as synthetic marijuana.
2010: The Peace pipe on 10th street in mcallen first opens its doors and is currently the 5th
location. Customers began to have a high demand for vaporizers both home and portable units.
Customers also start demanding products that deal with concentrates such as oil rigs, wax
containers, titanium nails etc.
2011: Customers start to have a very high demand for the natural sexual enhancement
supplements we sell such as Erectman, Monster X, One more knight, Master zone and are
bringing in profits.
2012: Government bans all synthetic marijuana herbal incense and does raids of all the smoke
shops that sell it. The peace pipe is highly effected since the herbal incense were bringing in a
large amount of profit that wasn't there before.
2013: Cream chargers start to sell a lot and bring in a large amount of revenue, even though they
have a high cost ($5) and a low profit margin (we sell them for $10) they make up for a lot of
the profits that were lost after the banning of synthetic marijuana. Robert is able to pay off his
home and the location on ware rd, mostly from the money saved off of the herbal incense sales,
Robert now has more assists under his belt
2014: The store in Penitas is closed due to its low declining sales, Robert believes he's better off
using the money else where.
2015: Robert gets a 60 acre ranch with owner financing and buys some cows and tailer house to
be at the ranch.
2016: Robert pays off ranch after one year and has even more collateral to use when seeking
financing for forte purchases.
Roberto did not have much when first starting the business and now says he has money to
the point that he doesn't have to worry about whether he can afford what he wants, whatever he
wants he is able to purchase now. Throughout the years Robert made many purchases including
new vehicles and a second house, family vacations, and is able to enjoy all the leisures of life
thanks to the risk he took in starting this business venture, . The business that Rob owns will
constantly be under change and things could go from good to bad in an instant depending on
what laws the government places in effect, not to mention the needs of this market are under
constant change as well and inventory will always need to adjust to the market needs.
References
Roberto Mora SR (business owner), Oct 16 2016, Q&A interview
Scarborough, N.M., & Cornwall, J.R. (2016). Essentials of entrepreneurship and small Business
Management (8th ed.). London, England: Pearson Education.
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