Defeated, Bugsy awards you the Hive Badge, which ensured obedience from all Pokémon up to level 30, and allows the use of Cut in the field. He also hands over TM49 (Fury Cutter), a weak Bug-type move that doubles in power for each successive hit.
Be sure to rest your team after defeating the Gym, as your rival ambushes you on the way into Ilex Forest.
Ilex Forest is a natural maze. The large, shadowy forest has become so overgrown in recent years that many young trees have taken root. One of these wayward trees blocks the path past the Ilex Shrine. Without HM01 (Cut), no one can reach the other side.
Azalea's charcoal maker hasn't seen his apprentice since he went into the forest. You'll find him not far from the entrance, and it seems that the Farfetch'd that cuts down the trees for them has wandered off and gotten lost in the forest. It gets spooked easily, so you will have to loop around behind it to chase it back to the apprentice. Don't forget to pick up the Revive nearby. Once it's rescued, the charcoal maker shows up and rewards you with HM01 (Cut)! Afterwards, return to the Charcoal Kiln in town and the apprentice will give you a Charcoal as thanks.
Man on a Ledge
In the center of the forest, east of the pond, is a man who will give you TM02 (Headbutt). In battle, Headbutt has a power of 70 and a 30% chance of causing the target to flinch. In the field, it can be used on the small trees across the region, sometimes knocking a Pokémon out of the tree. This is the only way to find Pokémon like Pineco, Heracross, and Aipom.
An Alluring Scent
Inside the forest's northern gate, behind the counter, is a woman with her Butterfree. Speak to her to receive TM12 (Sweet Scent). In battle, the move lowers the opponent's evasion; in the field, it lures wild Pokémon into battle.
Any Pokémon left here will gain one experience point for every step you take. However, the Johto Day Care accepts up to two Pokémon to raise at once. If both a male and female are left together, you may return to discover that the old couple has found an Egg. Keep the egg in your party like you did with Mr. Pokémon's Togepi, and it will eventually hatch. This is the only way to get more members of a certain species, like Eevee, and new baby Pokémon, like Pichu. In place of a compatible pair, a shape-shifting Ditto makes a great substitute.