Is your cannabis business moving towards growth or total failure?
Growth or failure in your new cannabusiness all depends on how you start it, run it, and the attitude with which you do both.
Have you laid the proper groundwork to acquire and keep a license? Do you check the latest cannabis-related news at least monthly, if not weekly?
Here are some mistakes you might be making and what you can do to sidestep failure and see growth and investment for your cannabis business instead.
1. Thinking You Don’t Need A Business Plan
What is one thing that even the most spirited entrepreneurs often overlook? It’s proper planning. As a current or aspiring cannabis business owner, you’re not immune to this common shortfall.
For your business, you’ll need not one but three different plans to get underway and to continue to run successfully. You want to start your cannabusiness on the right foot.
To do that, you should prepare a:
1. Financial business plan
2. Operational business plan
3. Regulatory business plan
Your financial plan is what you typically think about when the phrase business plan comes up. It covers projected income, expenses, profit, and a strategy for growth.
Your operational business plan takes care of the day-to-day matters by outlining standard operating procedures and job descriptions. It should further include information about your employee training procedures and how the different departments in your organization work together
Your regulatory business plan is crucial for gaining your cannabis license in the first place. It should give a full rundown of how your business will align with laws and regulations.
Need help with your business plan? Save yourself trouble by working with a cannabis consultant who specializes in the industry and knows all about compliance, licensing, and planning.
In addition to your business, don’t neglect big picture planning, which includes choosing the right location and zoning in on what products or services you want to sell.
2. Thinking You Can’t Be Professional AND Run A Cannabis Business
The stigma surrounding cannabis is changing slowly. Meanwhile, industry players are winning — and they’re not doing so by worrying about traditional definitions of professionalism. The word itself has changed drastically over the past few years, and particularly since the pandemic hit.
People no longer define professionalism by the way you speak or dress, by your business experience, or even your business model. In my experience, your professionalism is directly related to your passion, your character, and the seriousness with which you take your business and craft.
If you show up in Carharts and a flannel shirt to a cannabis business event because you’re coming straight from your grow operation, no one is going to ding you for it.
They’re more likely to see it as a reflection of your integrity, drive, and work ethic as opposed to a lack of professionalism. More specifically, they’re more concerned with how you show up in your business through the quality of your products and service and your dedication to serving your clients.
3. Not Staying Up To Date With Cannabis Business News
Do you know what the latest legalization news is? The cannabis industry is evolving rapidly. So rapidly, in fact, that regulations, societal perceptions, and best business practices can’t always keep up.
You can count on the fact that your people, the clients meant for you, are out there — but don’t think that starting a cannabis business is so mainstream now that there won’t be any pushback from your contacts or even your neighbors. Be prepared to handle some strange looks or comments with a smile and a bit of thick skin.
More importantly, though, you want to ensure you’re staying in line with constantly changing marijuana laws.
Even though marijuana is still federally illegal and classified as a Schedule I drug, a whopping 68% of adult Americans are now in favor of legalization as of November 2020, compared to 28% in 1977. So change is coming, we’re just not sure when.
What about the banking institutions?
Thankfully, the tables are turning in places like banking institutions. In late April, the US House of Representatives passed the Secure and Fair Enforcement Banking Act of 2021 (SAFE Banking Act), which would give protection to banks that service cannabusinesses.
Right now, most financial institutions continue to pull away from assisting cannabusinesses due to the federal status of marijuana, making banking options either unavailable or extremely expensive.
Once the SAFE Act goes through (fingers crossed), banks will be able to offer their services without the fear of penalties. The Act will help to even out the playing field for small business owners and minorities who need cannabis business loans and banking options.
If you don’t stay up to date with cannabis news, it’s easy to miss events like these which could have a long-term impact on the success of your business. Expect the backlash, know what’s happening, and take advantage of what’s available to you.
4. Neglecting Buzzworthy Accounting and Record-Keeping Practices
We’ve touched on regulations, operations, professionalism, and staying up-to-date on cannabusiness news. What about the money? Audits? Taxes? Growth?
Your financial business plan was only the first step.
If you’re looking to stay in business for the long term, finding the right bookkeeping firm is an absolute must. Experienced professionals will give you the guidance you need to be compliant while simultaneously putting you in a better position to increase profits.
Generally, small businesses tend to neglect investments in professional accounting. As for you, you’ll need to not only invest, but to do so in someone who specializes in the complex cannabis industry.
The repercussions of ignoring your accounting needs could lead to penalty fees, and might even mean the end of your cannabusiness if a random audit happens or your taxes reflect (even accidentally) any wrongdoing.
On a similar note, each state has different regulations for record-keeping. Some states want paper, and others want digital — some ask for both.
Save yourself potential ruin by practicing strict bookkeeping or finding a firm specializing in cannabusiness. Finally, keep backups of all records.
5. Not Marketing Your Cannabis Business Correctly
Marketing is a must for your cannabis business. Keep in mind, there are regulations here, too. Not all states allow cannabusinesses to market freely, and several major digital platforms have aligned with this stance.
Wherever you do decide to market your cannabis business, make sure you don’t mislead anyone. Clarify side effects, state the intended use, and, whatever you do, don’t advertise your product as a miracle cure for all health deficiencies. The last thing you want is to get dinged by the government.
Ok. That’s enough Don’ts.
Here are two big Do’s of cannabis marketing:
- DO conduct research on your intended market.
Who are your customers? Get to know as much about them as you can — their demographics, their problems, where they hang out, what they like to do, etc. Build a customer persona or profile so you know exactly who to market to.
- DO differentiate yourself from competitors.
This starts by getting to know your competitors, who they serve, how they market themselves and where they show up in the digital and physical marketplaces. By getting to know what they are and what they aren’t it will be much easier to understand how you are different, and in turn what you need to do to stand out.
Standing out may start with branding
Everyone knows what a cannabis business logo should look like. Green and leafy, right? What if you switched things up and broke the rules a bit? (Not too much, because you still want it to be clear that you are in the business, after all, but just enough to not look identical to every other cannabis business).
Design (or tell your logo designer) to combine that leaf with something that speaks to your mission. Your mission might be to improve the health of customers. Include an image that represents or showcases a healthier customer.
Or, you can go deeper in your logo by speaking to the end results — more time with family and friends, which leads to a happier customer.
Logos and other elements such as your color palette, packaging, and company can become strong brand assets that differentiate you from the market.
Your service speaks for itself.
Do your budtenders show exceptional ability to answer customers’ questions? Do they leave an impression customers don’t easily forget? Highlight this in your marketing. Let people know they won’t get this service anywhere else.
Don’t Make The Above Mistakes In Your Cannabis Business
Running any business is not without surprises. By avoiding the above mistakes, you’ll be in a better position to deal with any curveballs that come your way.
Of course, some situations you’ll want to avoid altogether. If numbers aren’t your thing, you’ll definitely need help from the experts. We specialize in cannabis bookkeeping and are happy to speak to you in a no-strings attached consultation call.