Starting a cannabis business is similar to starting another retail business. Plus, all startups share similar challenges when trying to get off the ground.
The most common reasons why startups fail include burning out, pivoting, bad hires, and running out of cash. You can learn from those who came before you.
The following are seven tips to help cannabis business startups succeed.
1. Have a Business Plan
A business plan helps the owners become acquainted with their company and the market. Elements of the plan include the:
- Company description
- Market analysis
- Competitive analysis
- Sales strategy
Some startups don’t proceed past this step. They realize that market saturation exists or that they cannot obtain financing.
Others gain more confidence. They realize that they have a solid strategy. Plus, professionals want to invest in them.
To succeed in business, start by putting together your plan.
2. Hire the Best People
When you hire the most qualified and trustworthy people, you worry less about internal problems. This type of business attracts a different crowd than a non-profit or technology company. Therefore, you must take additional security measures.
It’s wise to hire the best people. You also benefit from hiring armed security guards for your shop.
No startup can endure high employee turnover. They take with them company trade secrets, access codes, and customer information. Instead, hire the right people from the beginning.
3. Explore Startup Help Programs
A wealth of programs that seek to help startups get off the ground exist. Your job is to find those that help cannabis companies too.
Some programs provide financing with no strings attached such as grants. Others offer mentoring services.
If you plan to open a storefront, it helps to receive guidance on signing a lease, obtaining the right permits, and setting up the right business entity structure.
4. Network
Networking is an important aspect of the business world. Even though you find yourself in competition against them, it’s worth getting to know your peers in the cannabis industry.
In addition, network with the local Chamber of Commerce, industry associations, and nearby professional groups.
It allows access to veterans from the business world, many who don’t mind imparting their knowledge on to the new generation.
5. Build a Niche
As more municipalities hand out permits for cannabis companies, the competition becomes thicker. To succeed, you need to find a niche for your shop.
You can cater to a specific clientele. You can also offer small discounts or small gifts with purchase. If you see a return on promotions, the profit will cover the cost of the giveaways.
The point is to differentiate your shop from others in the area with a niche.
6. Obtain Software
Starting and keeping a company open has never had so much support. The number of resources available to startups is also great. Among the tools that every new company needs are software. Moreover, it’s often available for free or at a low cost.
Software companies were once startups themselves. That’s why many price their products to scale. You can find several products that offer free trials and low entry fees. Once your startup grows, the fees grow with it.
Software all startups should obtain are:
- Accounting
- Sales
- Marketing
- Inventory
A customer relationship management platform rolls marketing, sales pipeline management, and accounting into one program. Thus, it’s software worth looking into during your search.
Payroll software has also extended its features. It integrates accounting components and helps compile year-end reports for sales analysis and tax purposes.
7. Scale Your Business
Some startups fail because they bite off more than they can chew. Retail companies require an immediate infusion of capital. The capital allows them to acquire their inventory.
However, you require customers to purchase that inventory. Consider holding pre-sales to gauge interest in your product. Then, you can scale your company accordingly.
A company’s financial runway should always remain clear. Otherwise, you risk overextending yourself and shuttering your doors.
Conclusion
The factors that help startups succeed across industries and fields. For a cannabis business, adding a layer of security benefits the company. Security helps ensure that the inventory remains intact. Also, adopt good business practices such as a business plan, hiring the best people, and integrating software.