Founders often dream of selling to Costco—but last year, when Costco offered to carry my beverage brand, O2 Hydration, I said no.

It was a tough decision. I love Costco and I wish I could be brought to Costco, but I also knew a terrible truth: My brand just wasn't ready yet. And if you go too far before you're ready, retail can kill you.

If you have a product you want to sell on the shelves, here are three things you absolutely need before you say yes to a retailer.

1. Understand your market and test demand

Before you can scale as a CPG founder, you need a deep understanding of your market and you need to prove the demand for your product.

For my O2 brand, we started our retail efforts in a single region with a single retailer, Whole Foods. We expanded to 10 Whole Foods within a year and then expanded to a full region. This approach allowed us to understand what worked, and then duplicate it.

For example, we found that product samples attracted customers, and they were attracted after hearing our story. That's a great insight, but it meant we had to scale accordingly. By running a slow game on the ground, we built a loyal customer base and secured more shelf space — and we did it store by store and region by region.

2. Provide the necessary resources to replicate

O2 was flying off the shelves at Whole Foods, so we thought we were ready for prime time and agreed to launch nationally with Kroger, Publix and Sprouts next year.

That's when we learned our first hard lesson about retail.

When we expanded across the country, the lack of geographic focus dwarfed our efforts. We initially found success by focusing on the Midwest, where our team could actively support and promote our products. But when we went country, we couldn't hire and train people fast enough to replicate what we were doing nationally, and we immediately went out of business.

Pro Tip: Having a concentrated geographic focus allows you to manage and support your retail partners more effectively. It also helps build brand recognition and customer loyalty in specific regions before expanding further. Without the right resources, you cannot support the increased demand and logistics that come with larger retail deployments. This can lead to out-of-stocks, poor customer experience and ultimately, churn from retailers.

3. Have the conviction to say “Not yet”

When a retailer offers to carry your brand, it can feel like winning the lottery – and founders are often afraid to say no. They worry that this means closing a door.

It's not like that. It is perfectly appropriate to say, “Not yet.”

Retailers want brands that are built for success, and they're relying on MARKS to know if they are ready. Brands need to ensure they have the resources they need, in the right regions, before agreeing to retail expansion – and they also need to know what tools can get your product off the shelf.

For example: How often do you promote your product and at what price? What off-the-shelf marketing do you need to be successful and how will you achieve it?

Retailers won't do it for you. You are Odysseus and they are the sirens. They see something that works, and they want to push it as quickly and as widely as possible, and they'll dangle a tempting six- to seven-figure YES in front of you to get what they want. They assume you know what's working, you've figured out how to scale it, and you've secured the resources to do so. So if you say yes, you better know all this!

If you don't, then say “not yet”. The retailer will respect you for this. You just saved everyone a lot of pain.

Expanding into retail can be incredibly tempting, but it's essential to make sure you're truly ready before taking the plunge. By understanding your market, securing the necessary resources, and building geographic focus, you can set your brand up for lasting success. Remember, saying no when you're not ready can save your business and turn future opportunities into even bigger wins when you are.

Now you understand why I rejected Costco. I know my market well; my product sells well in many regions and specialty retailers nationwide. I'm building toward that national, mass-market game — and when I finally say yes to Costco, it'll be because I'm confident I can make it a win for both of us.