You’re not just a business owner; you’re a pioneer. The cannabis industry is still in its infancy. It took guts and determination to launch your cannabis business. Now that you’re growing, it’s time to think about what’s next. Empower your business for growth with these tips for the cannabis industry.
6 Tips for Running a Successful Cannabis Business
Shortcuts to success don’t exist. But the following tips represent today’s best practices for cannabis businesses. These tips can help you think more strategically and run your business more competitively as your company expands.
1. Identifying Your Niche in the Cannabis Market
Success often starts by standing out from your competitors. To do this, identify your unique value proposition. What is it that makes your cannabis business unique? What can your customers find in your business that they can’t get anywhere else?
Basically, you’re trying to carve out a business niche. You’ll find more success if you focus on a specific segment of the cannabis market. Common niches include:
- Medical marijuana dispensaries
- Recreational products
- Retail sales and distribution
- Delivery services
- CBD products
- Production and cultivation
But even within these niches, you can find further specialization. For example, cultivators might consider organically-produced products or small-batch cannabis for high-end customers.
Pursue your passions, but make sure you’re also tapping into real-world business data. Research current and emerging trends to learn more about evolving consumer preferences and cannabis technology. Retailers might expand by introducing a delivery service as long as it’s legal in your state.
Staying fresh and relevant can promote customer loyalty and keep your business thriving for years to come.
2. Securing Adequate Funding
In every business, the saying it takes money to make money holds true. To thrive as a cannabis business owner, you’ll need enough funds to cover things like:
- Operating costs
- Payroll expenses
- Equipment upgrades
- New inventory
- Marketing campaigns
Cannabis business owners don’t have the same financing options as traditional business owners — something you may have already discovered when your business first started. The good news is that you can still count on a cannabis lender to provide you with the capital you need to maintain and grow your business.
The best cannabis lenders can provide you with loan programs that include:
- Real estate loans
- Dispensary loans
- Working capital loans
- Equipment loans
- Accounts receivable (AR) loans/lines of credit
- Employee Retention Credit (ERC) bridge loans
These loan programs are diverse, so make sure to match your needs with the right funding opportunity. And make sure to compare multiple lenders to ensure you find the best interest rates and loan terms as well as to avoid any added fees.
3. Building a Strong Team and Network
Success is a team sport. As you expand your cannabis business, you’ll need to cultivate more than your product line. Cultivating strong relationships with your talent pool and business partners can help you expand your operations and reach new markets.
This might start with a basic hiring strategy. What are the key roles and responsibilities at your company? What skill sets do these roles require?
Answering these questions can enable you to translate your vision into a real-world job description, which, in turn, can equip you to start building a local talent community to staff your cannabis business.
Go beyond the walls of your store or cultivation center. What other industry professionals might help your business grow?
For instance, distributors and suppliers can give you access to better inventory or new product lines. Local cultivators can expand your network and possibly provide a cost-effective means to introduce new products.
4. Creating a Marketing Strategy
Marketing is the art and science of increasing your visibility. Business owners rely on a variety of means to plan and execute their marketing plan, including:
- Social media posts
- Content marketing (blogs, videos, etc.)
- Digital advertising
- Email marketing
- Community engagement
On one hand, business owners do well in marketing across multiple channels and platforms. On the other hand, you’ll achieve greater results by zeroing in on a marketing method that most resonates with your target audience.
Think about things like:
- What is my unique brand voice or identity?
- What social channels do my customers use most frequently?
- How do I engage my email subscribers?
Some experts recommend spending as much as 20% to 30% of your operating budget on marketing promotions during your first years of operations. That may also be a good target to reach for if you want to pursue an aggressive expansion project.
But more importantly, make sure to design a marketing plan that connects with your core market. And always use metrics to measure your success rate and make adjustments as necessary.
5. Ensuring Operational Efficiency and Compliance
The cannabis industry is tightly regulated. As you grow, you need to make sure you maintain compliance with established laws. This may include the renewal of your cannabis business license.
The exact requirements will vary by state, but the application process will generally include an application fee or license fee to renew your operating license. Always make sure to stay up to date with evolving laws and regulations that may impact your ability to operate your cannabis business.
Beyond these legal requirements, you might also consider ways to improve the efficiency of your operations. Technology can be a big help in that regard. Consider such investments as:
- An inventory management system
- Electronic invoicing and billing processes
- Security and safety measures and protocols
- Customer relationship management (CRM) platforms
The goal of these adaptations is to help you use your time more efficiently, accomplishing more with less.
6. Embracing Innovation and Adaptability
Nothing is constant except change. The best businesses stay on top of rapidly changing industry and economic shifts. For cannabis entrepreneurs, this means adapting to changes that influence the way they produce, sell or distribute their products.
For instance, you can increase your resilience by:
- Researching and keeping up with developments in the cannabis industry
- Jettisoning underperforming products or services
- Pursuing environmental sustainability and eco-friendly business practices
- Seeking opportunities to diversify your product line
- Embracing diversity among your customers and employees
- Implementing technology that improves your business/administrative processes
The more you embrace change, the more you’ll be able to adapt to a changing business climate, which may be essential as cannabis businesses become more commonplace.
Cultivate Your Business With the Right Funding
The future belongs to the flexible. Business owners who adapt to changing industry and economic conditions have a greater chance of thriving, even in the challenging world of marijuana. The above tips are designed to help you develop a niche, tap into funding and commit to practices that sustain your business long-term.
If you’re serious about growing your business, consider tapping into cannabis business funding. Canna Business Resources (CBR) can be your partner in this journey, providing you with loan options and guidance to cultivate your business growth. Book an appointment or contact CBR today.
Frequently Asked Questions
Q: Can a cannabis business open a bank account?
Technically, cannabis business owners can open bank accounts, but this is generally subject to state and local regulations. Some cannabis banks and credit unions offer banking services directed at cannabis businesses.
Q: What are the different types of cannabis licenses?
Licenses vary from cultivation and dispensary licenses to processing, distribution and research licenses. Check with your state for the specific requirements of each.
Q: What is the most profitable cannabis product?
The most profitable products vary by market. While some owners report strong profits from edibles, others report that CBD-infused products increase profits on nontraditional marijuana items.