Running a business is hard. Running a cannabis business is even harder. Entrepreneurs in the cannabis industry face uncertainty, risk, and harsh regulations. Even a small mishap can have massive implications for a cannabis business. To successfully operate in this industry, entrepreneurs must be able to identify their mistakes, learn from them, and prevent them happening again. That starts with education. Here are the biggest mistakes cannabis companies make and how to avoid them.
1. Underestimating Complexities of Compliance
What makes working in the cannabis industry so challenging? Compliance. Not only do cannabis businesses face extra scrutiny, legalities change constantly.
Cannabis business owners must adapt their policies to adhere to current regulations. This is a huge commitment. Failing to comply with legal and regulatory changes can lead to shut down or even jail time depending on the severity of the action.
Cannabis Entrepreneurs must create a strategy and game plan for dealing with regulatory changes. In other words, prioritize due diligence.
2. Not Defining a Niche
The cannabis industry is rapidly evolving. New products, services, and innovations are being introduced to the market daily. It’s an exciting time in the cannabis space. Yet, it’s also a crucial time.
Cannabis is a young industry full of uncertainty. In the next few years, we’re going to see thousands of businesses enter and leave the market.
Competition is inevitable as the industry develops. Successful businesses will identify key areas of the market and serve them. Cannabis companies who try to be everything to everyone will end up serving no one.
Don’t be one of those businesses. Identify exactly whom your cannabis company is serving and tailor your operations to meet their needs.
3. Miscalculating Costs
Running a cannabis company requires sufficient capital. According to Green Rush Consulting, dispensaries should plan on a minimum of $250,000 for initial costs.
Think that number is too high? Consider the upfront cost for a cannabis business application is around $5000 depending on the location of operation. That fee is non-refundable. So even if your business isn’t approved, you’re still paying. We’re only talking about the initial application fee here. Let alone operational costs.
Even the most seasoned entrepreneurs have failed to accurately assess their true costs. Running a cannabis business is a serious financial commitment. Don’t fall into the trap of assuming your business can wing it. Calculate your costs, check it twice, and then double that number. In addition, monitor your cash flow.
4. Not Being Adaptable
How to be successful in the cannabis industry? Learn how to be adaptable. The market changes quickly. What works today is not a guarantee tomorrow.
Businesses that fail to be flexible won’t make it in this industry.
Savvy cannabis entrepreneurs are proactive. They’re not afraid to change directions. They also know how to execute. Running a cannabis business successfully requires that you’re willing to continually plan, implement, and analyze.
5. Promoting Inconsistent Branding
Whether you’re selling vaporizers or cannabis-infused cupcakes, your products should reflect your brand. Too many cannabis businesses underestimate the importance of a well-defined brand. A brand isn’t just a color scheme or logo; it’s the essence of your business.
A strong cannabis brand defines a company’s mission, values, audience, competitive advantage, and vision.
Promoting inconsistent marketing messages puts your cannabis operation at a huge disadvantage. Not only will your brand be less memorable, it may not even reach the intended audience. Invest in consistent and clear branding for maximum impact.