Getting a business up and off the ground can be one of the most challenging things a person will do in life. The number of roadblocks for new business owners can be enough to think the deck is stacked against you in many ways: a full two thirds of all new businesses fail within their first ten years, indicating the tremendous difficulty of carving out a niche in a crowded market. Finding your way in the cannabis industry seems harder still due to the red tape and regulation. Nevertheless, every industry has its winners, and those who work hard in the cannabis industry will be well-placed to enjoy major growth in the near future. What startup mistakes should cannabis business owners avoid in the early days?
A business plan is crucial for the development of a cannabis dispensary, grow-op, or processing facility. There are many areas of your business that these strategic plans should address, ranging from startup funding to logistics to cash-flow projections to brand marketing to tax accountabilities. Business plans need to be solid enough to cover contingencies and emergencies, but flexible enough that they can be improved upon once operations begin to flow more naturally. Oftentimes funding is dependent on a good business plan, and a business that fails to develop a comprehensive plan is one that gets turned away time and time again by lenders.
Every business owner-to-be dreams of the day when they can cut the ribbon on their store, open the doors to a flood of customers, make their first-ever sale, and start putting themselves in the black. A lot of work needs to go into operations before you can pick out a ribbon, however, or else you may find yourself closing the doors and reorganizing in a frenzy. Remember that a new business needs employees and products, but above all else it needs customers. This is especially true in the cannabis industry, where the market may be highly saturated and potential customers need to be split away from their established purchasing patterns. Being the first to market can have great advantages, but tripping over yourself to open the door when there isn't a proper business need in your location just means you will burn time and cash until that need is established.
What is true in real estate is true in business: the first rule is location, location, location. The research you do into location will pay for itself many times over. Look at the voting records of the state, county, and city in decriminalization and legalization ballots to determine areas where lots of voters were in favor of cannabis—this is the best possible area for a strong customer base that you could ask for. Additionally, make certain that you are setting up shop in a location that is properly zoned. For example, some municipalities only allow cannabis dispensaries to open in industrial areas, and not many customers want to travel through factories and processing plants to pick up some product for the evening. Ensure you are able to comply with all local regulations, since you can be certain you'll need to prove it to the authorities.
No business can survive on its own. The choice of professional relationships to be made with clients, vendors, and partners may be the difference between success and failure, especially in the early years when a single bad mistake may be enough to sink a business. Whenever possible, partner with people who have experience in the cannabis industry, who know its pitfalls, and who are interested in furthering their connections to cannabis. Different states may regulate particular cannabis partnerships, especially in regard to funding, meaning that some partnerships may be more difficult to forge. You may also find many eager partners who want to get their name and brand within the cannabis sphere, but who have much less to offer you than you have to offer them.
Investing in your employees pays off and skimping on employee training can come back to haunt you. Cannabis employees need a solid understanding of the product, the sale, the customer, and the procedures before they can be entrusted with a cash register. Create a set of standard operating procedures so that every employee can find out what they need to do in a particular situation, and be sure to keep employees regularly trained on new or changing cannabis policies in your state.
Posted by Canna Business TeamFacebook
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