Why 'figuring it out as you go' costs product businesses more than they think
This month's strategic insight:
Strategic clarity transforms product businesses.When you understand how your decisions connect, every choice becomes clearer and more effective.
In this newsletter, I'm sharing a practical framework for making interconnected business decisions in product-based businesses. I'm also highlighting how strategic thinking prevents costly mistakes and creates sustainable growth.
Successful product businesses understand that every decision affects every other decision. Manufacturing choices impact pricing. Pricing determines viable retail channels. Distribution strategy influences positioning. Positioning affects customer expectations. Once you see these connections, business decisions become much clearer.
Many product business owners are making decisions in isolation: choosing manufacturers based on price alone, setting prices to "compete," picking retail channels without understanding fit, positioning themselves as premium while selling through discount channels. But you can start thinking strategically today.
Start with strategy
Everything else follows
You've created something amazing. Whether it's your first product or you've been at this for years, there's that moment when you hold your creation and think, "This is exactly what the world needs." You can see how it solves a real problem, how it's better than what's out there, how passionate customers will love it as much as you do.
But then reality hits. How do you get it made at the right price? Which stores should carry it? How do you explain what makes it special? Should you sell online, in retail, or both? Every choice feels crucial, but you're not sure how they all fit together.
The excitement is real, and so is your product's potential. What's often missing isn't passion or quality, it's a framework for making decisions that work together instead of against each other.
How to make strategic decisions that actually work
When product businesses make decisions without understanding how they connect, they often create expensive problems down the road. Here's how to think strategically about your choices.
Know your product inside and out: What actually makes it unique? Is it the design, the functionality, your personal expertise, or your connection to the market? Are you creating something because you live in that world and understand what's missing? The strongest product businesses sell what they know deeply.
Strategic questions to ask: What does this decision mean for my production costs and capabilities at 10x my current volume? How does this decision strengthen or weaken my differentiation from established competitors?
Example: A product creator who was passionate about sustainable materials chose bamboo fiber for their yoga mats. Initially more expensive than conventional materials, this choice aligned with their deep knowledge of the eco-conscious yoga community. When they reached scale, their material choice became a cost advantage because they'd built relationships with sustainable suppliers while competitors were still sourcing conventionally. Most importantly, they discovered their buyers were willing to pay the premium needed to make bamboo fiber profitable. The market valued authenticity and sustainability enough to support the higher costs.
Understand your customers' reality: What do they actually need that they can't get elsewhere? What can they realistically afford? Are they shopping where you think they are? Your customers should live in your world or share your expertise. Remember, buyers always want something new. How will you keep creating fresh products that maintain their interest over time?
Strategic questions to ask: What's the real problem my customers are trying to solve? Where do they actually go when they need what I'm selling? What's their buying process? Do they research extensively or buy on impulse? How often do they replace products like mine?
Example: A jewelry designer thought her customers wanted affordable everyday pieces, so she focused on simple designs under $50. But when she actually talked to her buyers, she discovered they were treating her jewelry as special occasion purchases and wanted more elaborate, premium pieces they could treasure. This insight led her to create a luxury line that her customers were happy to pay $200+ for, completely changing her business model and profitability.
Start small and learn systematically: How can you test your assumptions with the smallest possible investment? What's the least risky way to gain real experience before making bigger commitments? Every decision should teach you something about your market.
Example: Rather than ordering 10,000 units right away, a kitchen gadget inventor started with 500 units sold directly to friends and cooking enthusiasts. This small batch revealed that customers wanted three color options, not the single color originally planned. The feedback guided their manufacturing setup and prevented a costly inventory mistake.
See how everything connects: Your manufacturing choice affects your pricing, which determines your viable distribution channels, which influences your positioning strategy, which impacts your cash flow requirements. These aren't separate decisions, they work together.
Strategic questions to ask: If I change my manufacturing approach, how does that ripple through my entire business model? Do my profit margins support wholesale pricing, or do I need to focus on direct-to-consumer sales to stay profitable? What happens to my brand positioning if I choose different distribution channels?
Example: Instead of trying to get into every outdoor store, a climbing gear company focused exclusively on specialty shops where staff understood technical features. This meant slower initial growth but higher margins and customers who became brand advocates. Their focused distribution strategy supported premium pricing that funded continuous innovation.
From scattered to strategic:
a real transformation
Two engineers with a technically superior water bottle were stuck in decision paralysis. They'd spent months researching manufacturing options in China versus the US, pricing strategies, and retail approaches, but couldn't move forward because every choice seemed to conflict with another priority.
The breakthrough came when we mapped out their interconnected strategic parameters. As passionate climbers themselves, they understood exactly what serious climbers needed from their water bottles: durability for multi-day expeditions, reliable temperature control, and features that worked with climbing gear.
Their authentic connection to the climbing community became the foundation: this determined their retail strategy (specialty outdoor stores where staff understood technical requirements), which influenced their manufacturing approach (premium quality and specialized features that climbers would trust), which supported their pricing strategy (premium pricing justified by authenticity and functionality that climbers valued).
With this strategic clarity, they made confident decisions about overseas manufacturing (better quality control and ability to produce the technical features climbers needed), premium positioning (aligned with their target customers' willingness to invest in reliable gear), and specialty retail distribution (where their climbing expertise was valued). Within four months, they'd secured a line of credit, launched their first production run, and closed deals with three regional outdoor retailers.
Most importantly, they understood the reasoning behind every choice. When new decisions came up, they had a strategic framework to evaluate options instead of starting from scratch each time.
Your next strategic step
If you recognize yourself in any of these scenarios, here's what to do right now: take your next major business decision and think through the framework above. Don't just look at each element in isolation. Look for the connections between them.
For example, if you're deciding on packaging design, consider: How will this affect my manufacturing costs at scale? Which retail environments will this packaging work best in? Does this strengthen or weaken what makes my product special? What are the cash flow implications of this choice?
You're not looking for perfect answers. You want to make informed decisions with clear reasoning instead of educated guesses. When you understand how your choices connect to each other, every business decision becomes clearer and more effective.
Product businesses face unique challenges that generic business advice simply can't address. But when you build your decisions on a foundation that accounts for these connected realities, you stop gambling and start growing systematically.
Tired of making business decisions that feel like guesswork? I specialize in collaborative strategic planning for product business owners.
In focused sessions, we'll discover how all your choices connect and build the strategic foundation that makes every future decision easier and more confident.
