144 ENTREPRENEURSHIP
from high-quality implementation, and the firm that learns to cope with fragmentation
can thrive. A solid and profitable small business can be built on the following founda-
tions:- Regimented professional management. The introduction of managerial techniques and
professionalism into small-business operations can keep the firm profitable even
under strong price pressure. - Formula facilities or franchising. High degrees of standardization and efficient, low-
cost operations provide protection against eroding margins. - Specialized niches. A business that is highly specialized by product type, customer
type, order type, or geographic area can achieve minor economies of scale and add
high value for buyers.
Warning!A firm can be so specialized that it may not have enough customers to be
viable. Do not plan to open a pen repair shop, a shoelace boutique, or a restaurant based
on the concept of toast (although one based on breakfast cereal has apparently been
founded).
CRAFTING AND EVALUATING STRATEGY
Amar Bhide, in his important article on how entrepreneurs craft strategy, noted that the
most important elements for entrepreneurial success seem to be speed in seizing oppor-
tunities and eliminating unpromising ideas, a concentration on important issues, and the
use of realistic and spontaneous actions that include changing course if necessary.^57 His
recommendations are:- Screen out losers quickly. In the crafting of strategy, entrepreneurs frequently must
be very fast and agile because speed to market or to access resources can confer an
advantage. This means the entrepreneur has little time for long, drawn-out data
collection and analysis. Therefore, entrepreneurs must use a few basic rules that
have worked well for them as individuals in the past. These rules enable them to
be decisive. - Focus on a few key issues. These issues will vary depending on the entrepreneur
and the opportunity. If the opportunity is in retail, location will be a “go/no go”
issue. If the opportunity is the manufacture of a new pharmaceutical, regulatory
approval and licensing will be the key. The issues the entrepreneur should consid-
er will all depend on the situation. - Do not wait until all of the analysis is complete, and all the answers to the questions
are known before getting started. The entrepreneur has to integrate action and
analysis. In fact, it is not uncommon for entrepreneurs to do their market research
by simply trying to find customers. If customers are found, these particular cus-
tomers should be captured first. The information gathered in the action-research
stage will be used as data to revise and reconfigure the opportunity. The data may
indicate that some or all of the opportunity is not what it appeared to be in the early
screening stage. If no customers are found, the entrepreneur should be prepared to
change course.