This article originally appeared in the May 2018 print issue of Cannabis Business Times. To subscribe, click here.
As the cannabis industry becomes more regulated, the need to perform and act like any other legitimate enterprise is paramount to success. This will test many business owners, especially those with little to no financial industry background. Here, several cannabis industry experts share tips on avoiding business mistakes young companies make, and how to handle a variety of challenges.
1. Business Strategy
Your business strategy is where you will tell your “business story,” which defines your path forward with near- and long-term business objectives, says Terry Gibson, a consultant at the financial services and accounting firm RoseRyan.
The cannabis market has a lot of moving parts, and within that market there are areas to fill that may align with a company’s strengths better than others. Gibson notes that, generally, the narrower the focus, the better advantage a business will have for scalability.
“Very few people are going to be able to check every box,” he says. “In your strategy, try to define where you fit in and why you fit that area. What niches are you going to go after today and in the future?”
While some business owners have a sky-is-the-limit approach, not every cannabis cultivator may be looking to scale. Troy Prill, chief financial officer for Colorado-based, vertically integrated cultivator and retailer Strawberry Fields, suggests there is nothing wrong with starting a “mom-and-pop” operation that covers your expenses and lets you live your lifestyle. He compares these smaller businesses to vinyl record stores in the music industry.
“They do it because they absolutely love vinyl as their favorite thing in the world,” Prill says. “iTunes is in the industry for making money, and these people are in the (vinyl) industry for providing an awesome vinyl record to go buy. You could say the same thing about any boutique marijuana store or cultivator.”
Prill says business owners should understand that if you’re running your business out of passion and not scale, you won’t have the same potential for making revenue as some of the bigger, commercialized businesses moving into the space. Regardless of how small or big you want your company to be, you’ll still need to have a basic understanding of what matters to keep the doors open.
To read the full article in the May 2018 print issue of Cannabis Business Times, click here.
Top Image: © Natee Meepian | Adobe Stock
