Priorities, that’s what we set when we’re in business. One priority that is tricky is optimization in search of a greater profit margin. Product optimization, workflow optimization, operational optimization, and any other ways of making business more streamlined is a good thing in general, but can be a bad thing at times.

In general, optimized business means greater operating profit. But, there are some times when you should consider putting your short term operating profit less than front and center.

• When you’re launching a product.When launching a product there are a lot of concerns. First, is even getting the thing off the ground. Then there are considerations of adoption rate, market success, customer feedback, supporting operations, and quality testing are also important. At this time if you are engineering down product and operational costs you could be sacrificing a few things of value: time and money. It takes time to optimize your offering, and in the mean time you’re not in business. It takes money to streamline your business, but you may never see adoption of your product and that investment was of naught. Or, maybe worse, a competitor makes it out before you.
• When you have a market but are entering new territory.If you have a product that is successful in a market and you are looking to expand, this could be another time to consider de-prioritizing profit. Business is fast and if you’re racing to grab market share you sometimes need to put product optimization behind you so you can control a market. This can mean entering contracts with less margin. It can also mean that those plans to engineer down costs are backburnered so you can capture a new customer base.
• When the cost/benefit doesn’t work out. Often times we see the carot. We see that we can increase our operating profit by a certain percent. Or we see that we can decrease our costs by so much per unit. We get tricked into investing time and money into chasing these margins. We don’t really do a cost/benefit analysis. Look at the man-hours and money it will take to reduce costs. Try to quanitfy for yourself the lost opportunity cost of time passed. Look at your increased margin per unit. Look at your sales projections. Look at the opportunity cost. Then, decide what the best course of action is.

So, with all that said. Optimizing your offerings and operations is a great thing. It can be easy money to capture. Just be cautious of the situation you are in before pursuing optimization.

It’s tempting for startups to look for increased margins, especially if they are thin to begin with. Sometimes you have to make the investment so your business can survive. Just remember, sometimes the search for optimization can kill you. I’ve seen it a lot.