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After you defeat Bugsy, head to the left, into the Ilex Forest. If you have not already, you will be stopped by your rival, and challenged to a fight. In my experience, it was relatively easy. Once you defeat him, i recommend going to the PokeCenter and healing up. Go into Ilex Forest, and there will be a man there, he stops you, and says something about his master's Farfetch'd being gone. Do the task and get both of them back. Once you do, you will be granted with HM01 Cut. Which will allow you to continue on.

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Q: What do you do after you beat the second gym in Pokemon Heart Gold?
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