Starting any new business can be a scary endeavor. The involvement of cannabis can make it even trickier because of the industry’s short history and its often-changing regulations. Many people still hold a negative view of cannabis because of the long-standing prohibition on its use. Read on for the 6 most common cannabis business mistakes and how to avoid them.
Mistake #1: Rushing to open your business
Don’t open for business before you have customers. A new business can have everything set up correctly: look, inventory, employees, and logo. But if you don’t have customers, it’s not going to matter.
The cannabis industry is one space in which being first to market is not always the best approach. Do not rush to open. Establish that there is a need in your state and locality and prep your business while you wait. Once the market is established, then it’s time to open.
Mistake #2: Not having a solid plan
As with anything, having a solid business plan in place is critical.
One red flag when you are choosing a location for your business is wishy washy regulations. States that can’t decide on definite laws for the cannabis industry make it extremely difficult to operate law-abiding businesses. Choose a state with clear written rules and regulations. You need to be able to show in black and white that you are operating according to all regulations. Not only does that help you remain compliant, but it will make people more confident in buying from and working for you.
Be realistic. If this is your first entrance into the cannabis space, take it slow. Learn as much as you can about a few niche products, perfect them and then branch out. Trying to do too much at once or you will spread your resources too thin.
Mistake #3: Not being prepared for surprises
The cannabis businesses that stand the test of time are the ones that adapt to change. The cannabis industry is a place for brave pioneers. Many people want to enter the industry while it’s still young and while getting in early can be great for business, it also means you should be prepared to ride the wave of a constantly shifting industry.
Learn as much as you can and don’t get too set in the way you do things. Read articles. Pay attention to science and research. No matter where you are in the industry, you want to get your hands in the dirt. Understand the plant and why people are drawn to it. Just like any industry, people with a genuine love and interest of their product will always fare better.
You also need to prepare for the worst. Any business proprietor will tell you to plan for unexpected difficulties. Take risks, but keep some savings on hand in case of emergencies.
Mistake #4: Not partnering with the right people
Because the cannabis industry is still so young, experience is a premium skill. Seek out people who have experience working with cannabis when you look for employees and partners.
States have differing rules about which businesses can work together in the cannabis industry. Some states require that your products come from a single source. Expect to also come across a lot of non-cannabis businesses that want to partner with you. On the other hand, banks, insurance companies, and other non-cannabis-related businesses may be hesitant to work with companies that deal in a still somewhat socially unacceptable product.
Even if you’ve opened businesses in the past, expect some extra complications in areas that usually progress seamlessly. Once cannabis is made federally legal, all businesses should be more open to working with those in the cannabis industry.
Mistake #5: Not understanding your customers’ changing needs and wants
The cannabis businesses that survive and thrive are those that pay attention to their customers needs. Listen to what customers want from their cannabis products, then create it for them.
Implement a way to garner customer feedback. Make it quick and easy so people will do it. Offer them a reward for getting back to you. Find out what brought customers to you and what sealed the deal and made them buy from you. Once you know those things, you’ll know how to proceed.
Mistake #6: Not keeping up with updates to the law
One of the most frequent mistakes made by cannabis businesses is unknowingly breaking the law. Laws change often, so prepare for the changes. Give someone the dedicated responsibility to make sure your business is complying with all laws.
When you start small, you may think you have it all under control yourself. Once you hire employees, you are now responsible for their actions and mistakes. You will need someone to know, understand, and explain the law to your employees, and to make sure they commit to following the rules.
Learn about Other Common Cannabis Business Mistakes
Want to learn more about common mistakes that plague cannabis business owners? Join us for a CannaCon event near you. You’ll have the opportunity to engage with industry leaders and network with other budding entrepreneurs. Registration is now open for CannaCon South.