Imagine that you are selling something that you simply cannot sell or produce in large quantities. This something becomes like gold for you, as you don’t even reach the point where economies of scale kick in. What should you do in such cases? Produce something else that doesn’t contradict your moral principles. Or use some scale-efficient resources in collaboration with someone else.
For example, a company produces “organic” products. Their level of development is at the startup stage. They dream of purchasing equipment for the production and packaging of butter. For now, they do everything almost by hand, using quite ordinary household appliances. They produce as much as 70 kilograms a week, and they barely have their own transportation to bring the products from another region to Kyiv. They send it via a minibus in a thermal bag. The minibus runs once a day. Their sales channel is very limited. Home delivery is impossible because they don’t have their own vehicle. They can’t increase sales in any way. As a result, their products are so expensive that only one wine boutique in the city sells them. Their high moral principles prevent them from producing “non-organic” products. But all their growth is hindered by transportation, which they cannot afford. Having their own transport would allow them to deliver directly to homes and expand their distribution network. This would lead to a new level of operation, where expensive and shiny equipment could work at full capacity.
They came to me for advice, and I simply told them that besides organic and conventional, there is something in between that aligns with moral principles—what is called “homemade.” I suggested that taking a small step back to a market-style business model would allow them to ensure profitable transportation and delivery of “organic” products to those who need them, and “homemade” products to those who want “homemade.” To distinguish themselves from the anonymous market (we all remember how much I value transparency), it would be enough to keep a record of the product’s lineage and not mix raw materials from different sources. This way, consumers would know that the risk of contamination is minimized. After all, the danger of poisoning and infections—and the need for pasteurization—arises from the fact that one contaminated liter mixed with a ton of other milk makes the entire ton unsafe.
In other types of businesses, it can often be beneficial to allow yourself to engage in something else so that your main product can share costs with that additional venture. For example, ice cream vendors start selling other products in the winter—like frozen vegetables. They may not make a significant profit from it, but the distribution and logistics structure doesn’t sit idle during the off-season, and that’s the main thing.
Sometimes the only way to reduce the cost of promoting your product is to sell your competitors’ products. If certain strategic or high moral principles prevent you from doing this, you can always create a channel of seemingly independent sellers whom you sponsor and support for one reason: to have them offer your product first. Only after that would they sell the competitors’ products. These sellers could generate sales volumes that would allow them to make money, while your product—whether it’s in rare demand or produced in small quantities—would be sold as if that were their sole focus.