WHAT EXACTLY ARE you selling?
At a practical level, many businesses operate for years without clearly defining what they’re actually selling to the market.
This creates problems later in pricing, marketing, customer acquisition, scaling, and ultimately profitability.
Without overcomplicating the exercise, most businesses fall into three categories: product-based, service-based or hybrid businesses.
A useful starting point is to define your offering in one sentence.
If the statement reads “We sell…”, you are most likely operating a product-based business.
If it reads “We help businesses or people achieve…”, you are most likely operating a service-based business.
A product-based business primarily sells a tangible item, where the value proposition is often linked to quality, convenience, pricing, or differentiation.
A service-based business sells expertise, labour, skill, or outcomes, where trust, consistency, and reputation become significantly more important.
Many small and medium enterprises (SMEs) ultimately operate hybrid models, combining both.
Importantly, customers do not always buy the thing itself. In many instances, they are buying convenience, certainty, expertise, speed, trust, or experience.
Businesses that fail to understand this often misunderstand their actual market position.
This distinction materially affects how the business is marketed, how the offering is priced, how customers are engaged, how operations are scaled, and importantly, how risk is managed over time.
One of the more common SME mistakes is attempting to sell ‘everything to everyone’.
In practice, this usually results in weak positioning and ineffective marketing.
Businesses that do not clearly understand their offering frequently direct the wrong message to the wrong market, eventually creating operational and financial pressure that becomes increasingly difficult to correct.
Understanding the nature of the offering also assists in future-proofing the business.
A product-based business may need to focus on differentiation and supply chain resilience.
A service-based business may need to focus on reputation, retention, and how expertise can eventually be scaled beyond the founder.
The clearer the understanding of what is being sold, the easier it becomes to structure the rest of the business around it.
In practice, businesses that understand their offering intimately are generally far better positioned to adapt, scale, and withstand distress over time.
– Johannes Shangadi is a Namibian legal professional and managing consultant at Strategic Corporate Advisory Namibia.
