How To Determine What To Produce, How To Produce And For Whom To Produce To Start Up A Successful Business

To start up A successful business can be very challenging. The problem of what to produce and for whom to produce is a basic economic problem for every entrepreneur because most entrepreneurs are producers. Deciding what to produce can really be taxing as your resources are limited compared to the needs you want to meet.

In a capitalist economy that encourages entrepreneurship, the market forces of demand and supply and also the consumers determine what to produce unlike the centrally planned economy where the government decides what to produce and how it is been distributed.

As an entrepreneur, it is important you employ critical analysis in other to decide the best possible option to go for in determining what to produce or for whom to produce.

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There are many factors that determine what to produce, how to produce and for whom to produce in order to start up a successful business. As an entrepreneur or someone that wants to start up a business enterprise, you wouldn’t just want to jump into business without knowing and understanding what you want to do. Solving the basic economic problems will help you in setting up a business enterprise that meets needs.

To start up a successful business, it must meet a need(s). So before you go into production whether you are introducing a new product into the market or modifying an existing product, you will not succeed without clearly understanding what to produce, how to produce and also for whom to produce.

This topic is not a new topic especially to students studying economics or that studied economics but we are going to be relating these basic economics problems to starting up a business or entrepreneurship.

We will be looking at the factors you should consider in deciding for whom to produce, what to produce and how to produce as an entrepreneur whether students still in school or out of school or anyone aspiring to become an entrepreneur.

So we will be dividing this article into:

  • Factors to consider to decide for whom to produce
  • Factors to consider to determine what to produce
  • Factors to consider to determine how to produce

Let’s get started…

A Successful  Business
Source: Pixabay


Entrepreneurship is not only about starting a business to make profit; it is also about solving identified problems or meeting an unmet need. As an entrepreneur, you have to understand your environment and the people so as to determine for whom you want to produce and sell your product and service to.

Never expect everyone to be your customer and your ability to understand who your ideal or real customers are will help you figure out what to produce and sell. So know who your customers are and for whom you are producing and channel your product or service to suit their needs better.

Let’s look at some of the factors that determine for whom to produce:

  • The people that make up your society

This is one factor that needs to be considered in knowing who you want to produce for. Study your environment and try to know the population or number of people in your society.

This is where the knowledge of population comes in. you should look at the;

  • Age distribution
  • Sex distribution
  • Occupational distribution

In determining who your ideal customers will be, you have to know the type of people that make up the population of your society or community.

  • If there are more old people, young people or children
  • If there are more males or females
  • The type of occupation that is prevalent in the society

You knowledge of this will help you know your ideal customers and reach out to them better.

  • The level of income

It is very important you consider the level of income of people in your society; know the high income earners and low income earners. In a society where there are more high income earners to low income earners, you will definitely want to channel your production to meet the needs of the high income earners as they will buy more unlike the low income earners who will have a low purchasing power.

  • Identifying the unmet need in the market

Researching about the market for your product and identifying the unmet need in the market will help you determine the people that will benefit from your product. For instance, if there is a need for producing portable companies and office machines that can fit into offices without occupying space, then you would know that your ideal customers would be companies and other people that use computers.

You will now have to channel your resources into making computers to suit their needs better.

  • The buying decision of people around you

Everyone make their purchases differently. Most especially, the youths engage in impulse buying while some adults take time to research about products before purchasing them and this help them make decision on what or how they would buy.

Suppose you have what to produce in mind, understanding how the customers have purchased that product in the past will help you determine who your ideal customers are.

  • The type of economic system

A country that is practicing a capitalist or mixed economy where individuals are in control of production and distribution of goods or services, the customers or consumers of your product will depend on the price you fix for your product and also those that can afford it.

Most countries of the world practice capitalist and mixed economy so it is easier for entrepreneurs to determine for whom they want to produce unlike a socialist economy where the government of the state determine who produces, what to produce and the quantity to be distributed.


You cannot venture into a business without understanding the market so as to figure out what to produce and how to satisfy the needs of your customers. it is important for you to know that for you to start up a successful business, it must meet a need and satisfy your customers.

Let’s look at some factors that determine what to produce.

  • The customers’ needs

Like we have been saying that every product or service must meet a need for it to be relevant in the market. The customers are the main reason for establishing your business and if you have this in mind, your product or service will be channeled to meet their needs.

They are the focal point of your business, so try to figure out or identify an unmet need and from there figure out a way to meet that need. The identified need has already given you a clue of what you have to produce. You wouldn’t want to produce what will not sell or what people will not buy. So it is important to know what to produce.

  • The demand in the market

A product or service that has more demand will definitely have a lot of producers or sellers. Nobody will want to produce a commodity that is not demanded for in the market.

If you are confused about what to produce or you do not have an idea of what to produce, you have to take a good look at the market to know the product or service that people demand for more and also why they demand for the product. This can encourage you on what to produce and how best to meet your customers’ needs.

Also, if you already have what to produce in  mind, you have to conduct a market research to know the level of demand for the product you want to produce or the service you want to render. This will help you determine what to produce and also the quantity to produce.

  • Why the customers or consumers need a product

This is another factor to consider in determining what to bring to the market. As you try to figure out what your customers need, you also have to know why they need that product. You have to understand the level of importance of that product or product.

  • Is the product a necessity or basic need?
  • Is it a luxury that they can do without?

The importance of a product to the consumers or customers will help you decide on what to produce or bring to the market.

A product that is of great importance to the consumers like food, shelter or clothing will sell more. Also, some products are article of ostentation (that is they have high prestige value) and people will want to get more of them like cars, jewelries etc.

  • Income of customers

You wouldn’t want to go into production and nobody will patronize you because of the price of your product or service. In deciding what to produce or what business to venture into, you have to consider the level of income of your target customers and if they will be able to purchase your product or service at a given price.

Low income earners will definitely have low purchasing power and if they are prevalent in your society, then you will have to produce what they can afford or produce and make it affordable. Also if you are in a society where there are more high income earners, then you should produce to match their earnings and standard.

  • The available resources

The resources could be capital (money), manpower or even land. In economics, you were taught that the resources available to man are limited compared to the wants which are unlimited. The resources available to start up your business will determine the type of business you want to start up.

For an entrepreneur that has little or no capital to start up your business, you can decide to start up a small scale business and expand with time as the business starts yielding profit. Someone that has enough capital can start up a large scale business.

Even the workforce available can also determine what to produce and the quantity to produce.

  • Cost of production

This is very important factor that every entrepreneur should consider in order to know what to produce. You have to consider the product or service that can be produced at a low cost that will yield a high profit.

In trying to figure out what to produce, conducting a market research will help you determine what to produce and how to also produce at minimal cost. The knowledge of economics will help you to optimally utilize your limited resources and produce goods and services at a low cost.

Most entrepreneurs will not venture into a business that has a high a high cost of production or very high risk. Successful entrepreneurs take calculated risk.

  • The location or business environment

The location of your business or your environment can influence what you want to produce. The climatic condition of the place, the type of people in the place (their age, sex, occupation or lifestyle) can influence what to produce.

In an environment where youths are more like a school environment, it will mean that what will be produced will be more of what young people use like mobile phones, computers, notebooks, writing materials etc.


Figuring out how to produce is another problem that every entrepreneur should consider in starting up their business. There are many factors that determine your method of production. We will be looking at some of these factors.

  • The type of product or service

The type of product will determine the method of production you want to adopt. Every product has its method of production and technique used in production. Whether you want to adopt the capital intensive technique of production (that is use of capital equipment or machines) or labor intensive technique (that is the use of more labor) in production depends on the type or nature of the product.

  • The level of technology available

In this digital age where technology is prevalent, most companies or factories now adopt capital intensive technique of production. The capital intensive technique requires more capital to purchase machines and equipment but there will be a high level of efficiency and productivity unlike the labor intensive technique of production.

The level of technology available in the society and available to the entrepreneur will influence how he or she produces.

  • The capital available for production

The amount of money (capital) available for production will determine if you will produce on a large scale or on a small scale. When you have enough money to invest in your business, you will definitely want to produce enough goods and services to meet the needs of your customers unlike when you have little or no capital to invest in your business.

The amount of money you have as capital will help you in getting machines or equipment, paying workers and even meeting up with the day-to-day expenses of your business. So the capital available for production has a lot to play in the level of production.

  • The cost of production and operation

Let me put it this way, the cheaper the cost of production (that is the payment made to the factors of production – land, labor), the more the production of goods and services. Every entrepreneur and business owners are looking for the best possible way to utilize their limited resources in order to maximize profit.

So the cost of production will determine the quantity of goods to produce and also the technique of production to use. In determining how to produce, you have to be rational in making decisions so as not to spend more and gain less.

  • Customer base or level of demand

The demand for a product will greatly influence how it is being produced. A product that has a high level of demand will certainly be produced in large quantity unlike a product that has a low level of demand. When a product has a high level of demand, you will have to engage in large scale production so as to produce enough to meet the growing demand and so capital intensive technique might be employed.

The same way the level of demand influences what to produce, it also influences how to produce because when you have figured out what to produce; you will then have to determine how to produce especially when the product or service is essential and has a high demand.


The knowledge of economics is needed in business. The knowledge will guide you in determining the best way to make use of your limited resources in order to know what to produce, how to produce and for whom to produce.

Every country is faced with these basic economic problems and also entrepreneurs need to understand how to solve these problems because the knowledge will help you in producing the right product in the right quantity to meet the needs of the right people using the right production technique.

Remember that production is not complete until it reaches the final consumer and so to excel in running a business, you have to produce what your customers need or render a service that will meet their needs.

Wherever you find yourself even as a student, try to analyze and understand your environment and look for a way to make use of the opportunities around you. Always be a problem solver and try to know the unmet need and figure out the best way to turn the need or problem into a business opportunity.


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