The Solar Feeder

Case Analysis: The Solar Feeder

By: Lew G. Brown and Emily Abercrombie

University of North Carolina at Greensboro

Introduction

Ed Welsh’s creative ingenuity and Bo Haeberle’s entrepreneurial spirit led to the development of the solar feeder. The solar feeder was a solar powered, squirrel resistant bird feeder that delivered a low-voltage jolt to squirrels when they contacted the feeder. It was birth in response to a problem Ed’s brother experienced at his home where the squirrels constantly attacked the bird feeders and scared away the birds. After six years of product development and design, Ed and Bo along with Scott Wilson formed Squirrel Defense, Inc (SDI) to manufacture and produce the solar feeder; a high-end and award winning bird feeder so that they could take orders for the product and meet demand interest generated from participation the Habitat for Humanity auction and the Bird Watch America trade show.

In their eagerness to sell the feeders, the men opened the manufacturing plant in Greensboro, North Carolina without the creation of a business/financial plan, marketing strategy, and performance of market research. Bo and Ed believed that because the solar feeder was an award winning product it would sell; however, they soon realized that having a highly-recognized product was not enough to have a successful business. The company experienced cash flow problems, production problems, experienced the inability to meet consumer demands, and missed sales opportunities. In this analysis, the problems SDI faced will be examined and solutions for correction will be proposed.

Analysis

From their participation in the Habitat for Humanity auction, Bird Watch America trade show, and their connections with distributors, the company had a high-demand product. The feeders produced by SDI provided three mounting options that were not made available by its competitors. Because of the award-winning status of the product, the company was sought by potential investors. SDI maintained a good working relationship with the distributors and their product was superior in comparison to products offered by competitors. SDI offered two types of feeders compared to their competitors who offered only one version.

Although SDI had a unique, award-winning they experienced difficulties. Even with more orders than they could fill, from a financial standpoint SDI was not profitable, had no cash flows, and could not breakeven. Their balance sheet reflected a negative checking/savings balance of ($7,308) in 1999, payroll expenses of $2,418, and long-term debts of $26,933. With sales of $56,071 in 1999, SDI ended the fiscal year with a negative net income of a ($26,607). The company experienced excessive payroll costs and production costs as the