Entrepreneurial Strategies 121done a bad job raising you.” But Inagi persisted and opened her business, Maruichi
Bagel, in August 2004. After a slow start, the store now draws crowds and Inagi makes
a modest profit.^12
Entrepreneurs can launch new ventures by filling market gaps such as supply short-
ages. Sometimes the product or service in short supply must be physically transferred
from one area to another. In this case, filling the supply shortage resembles geographic
transfer in that the entrepreneur organizes resources to fill a shortage within an area. For
example, recent trends indicate that for various tasks at varying times of the year, many
firms prefer to hire temporary workers rather than full-time employees. However, there
is a shortage of people available for temporary positions because most people prefer to
work full time if they can. New ventures have been developed that specialize in person-
nel services for temporaries. These firms, like Professional Employer Organizations (see
http://www.peo.com),,) organize the resource that is in short supply (temps) to meet market
demand. They also meet the demands of the temporary personnel by scheduling addi-
tional work after each temporary assignment expires. For the firm, the shortage is
relieved; for the personnel, there is full-time work (in various temporary assignments).
An underutilized resource is one with an economic value that is not recognized or
one that is not being used to its best advantage. Often people are the most underutilized
resource. Hence, entrepreneurs who can more fully realize other people’s economic
value are considered leaders. The underutilized resource can also be physical, financial,
reputational, technological, or organizational. For example, entrepreneurs in the finan-
cial sector find ways to better use nonperforming financial assets, such as cash or bonds.
Entrepreneurs have helped large organizations with strong positive reputations (for
example, Disney and Coca-Cola) gain additional income by licensing their brand names,
trademarks, and copyrights. Underutilized physical resources are often somebody’s junk,
waste, by-product, or worn-out product. These resources constitute the core of the recy-
cling and remanufacturing industries. For example, entrepreneurs are building business-
es by finding new uses for the mountains of worn-out tires dumped across the United
States. Others are building vending machines that take in aluminum cans for recycling
and dispense store and manufacturers’ coupons.
Creating or modifying existing distribution channelsenables the new venture to
take advantage of the momentum that already exists in the value chain. For example, if
strong production or inbound logistical areas already exist, finding new channels helps
the entrepreneur to reach new markets. Many longtime successful catalog sellers, such as
Lands’ End, now use their Web sites as surrogate catalogs. They still do most of their
business by mail order, but the Web is a new channel for them.
Customer Sponsorship. A new venture’s launch may depend on the momentum sup-
plied by the firm’s first customers. A customer can encourage an entrepreneur in either
of two ways. A customer contract can guarantee the new firm sales, and help it obtain
its initial financing. Because the customer is not assumed to have altruistic motives, the
entrepreneur should seek to expand the customer base once the venture is up and run-
ning. Sometimes, customers encourage entrepreneurs to become a second source. If the
customer has previously had difficulty working with a single supplier, good purchasing
practice would suggest that the customer rebid the contract. However, a good alterna-