How To Start A Cannabis Business

Start A Cannabis Business

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Are you looking to start a cannabis business?

If you talk to any entrepreneur, getting started is one of the hardest parts of launching your own business.

There are many things to consider, such as:

  • Validating your business idea
  • Setting up your business structure
  • Launch ideas for your business
  • Determining your marketing strategy
  • And much more!

In this detailed guide, we lay out all the steps to help you get started and run your business successfully.

market size
$33.1B
avg revenue (monthly)
$183K
starting costs
$14.9K
gross margin
40%
time to build
7 months
growth channels
SEO
business model
E-Commerce
best tools
Slack, Quickbooks, Instagram
time investment
Side project
pros & cons
35 Pros & Cons
tips
5 Tips

💡 Introduction To Starting A Cannabis Business

Is Starting A Cannabis Business Right For You?

There are many factors to consider when starting a cannabis business.

We put together the main pros and cons for you here:

Pros of starting a cannabis business

• Flexibility

You can put as much time into the business as you'd like. If you like the work and have some initial experience, you can start small and manage all aspects of the business on your own.

• Ability to start your business from home

It's not necessary to have a physical storefront or office space to get your business started. You can do everything from the comfort of your own home, at least in the beginning!

• Little startup costs required

The cost to start a cannabis business costs significantly less money than most businesses, ranging anywhere from 1,052 to 28,819.

• Rewarding work

Starting a cannabis business can be really rewarding work. After all, you are solving an immediate issue for your customer and you're working on something you truly care about.

• Scalable

With businesses and processes changing daily, there will always be demand for new features, products and services for your business. Additionally, there are several different business models and pricing tiers you can implement that will allow you to reach all types of customers.

• Traffic to your website

A cannabis business gives people a reason to visit your website and to keep coming back to you!

• High margins

The gross margins for your cannabis business are typically around 40%, which is considerably high and allows you to grow your business and manage costs easily.

• Quick build time

The average time it takes to build your product is quick - typically around 7 months. This will allow you to bring your product to market faster.

• Easy to encourage "impulse buy"

In the cannabis business, you have a much higher chance of encouraging your customers to buy on impulse - you can easily alter the price, placement, packaging, and promotional value to influence the decision of your buyer.

• Unlimited income potential

With starting a cannabis business there is no cap as to how much income you can make. The stronger your business skills and the more energy/time you put into your career, the more you'll make.

• Amazing perks and discounts

Working in the cannabis business comes with its perks! As a seller for these products/services, you typically also get to enjoy industry perks and discounts.

• You are your own boss!

With starting a cannabis business, you are the one to make decisions for almost all of the operations. Calling the shots can be empowering and liberating!

• Higher likelihood of getting referrals

This business is all about referrals, which can be a a very impactful way to attract and retain customers. It's critical that you have a great referral program in place that incentivizes your customers to tell their friends about your product.

• You can sell your product in various places!

There are various different markets to sell your product, which will help you reach different audiences and revenue streams.

• Simple business model

A cannabis business has the advantage of a simple business model, which makes launching and building the business more seamless.

• Control your own destiny

Starting A Cannabis Business allows you to control every aspect of your life and make your own dreams come true every day.

• You get to do something you truly love

With starting a cannabis business, you get to put your energy into something you are truly passionate about! You'll find yourself devoting as much time and energy as possible into the business to make it successful.

• You can work from anywhere!

Not only can you start your cannabis business from home, you can also run your business from anywhere in the world. This is the entrepreneur dream.

• Ecommerce retail is growing fast

Ecommerce has been grown rapidly over the years and is expected to hit a total of 4.9 trillion dollars by 2021.

With running an ecommerce business, you provide your customers with alternative and more convenient shopping experience, which will ultimately drive sales.

• You can promote and sell your product on Amazon

Although there are some disadvantages to consider when selling your product on Amazon, there are also a host of benefits. Mainly, Amazon is the world's largest online retailer, so you're bound to tap into new business and reach an entirely new audience.

• Various different ways to make money

With starting a cannabis business, there is not just one business model to choose from. This field is amazing in that there are various different ways to make money. Although this may complicate things, it's great to have different options and sources of revenue.

• Make money while you sleep

The advantage of starting a cannabis business is that you have the ability to have passive income and make money while you sleep. This is the dream for many entrepreneurs.

Cons of starting a cannabis business

• Crowded Space

Competition is high when it comes to your cannabis business, so it's important that you spend a good amount of time analyzing the market and understanding where the demand lies.

• Finding The Right Supplier

Most businesses in this space go the supplier/manufacturer route, which isn't a bad thing! However, finding the right supplier can take a lot of time, energy and trial/error. If done properly, this process can save you months (if not years) of time and energy. More on this below in the "finding a supplier" section.

• Security Issues

With any Saas business, data loss and security issues may arise throughout your process of building your product. It's critical that you understand exactly what you're responsible for and how to avoid potential issues down the road.

• Lack of benefits

With a cannabis business, you are typically self-employed and responsible for finding your own insurance, which can be quite costly and time-consuming.

• Isolation

Often times, as a cannabis business, you typically work alone and do not have much face-to-face interaction with other team members.

• Taxes

As a cannabis business, you typically pay self-employment taxes which can be quite high. It's important to understand what you will be paying in taxes each year so you can determine if the work you're taking on is worth it.

• No safety net

Typically, as a cannabis business, you do not receive a consistent pay-check and instead earn money based on your transactions each month. During the slow periods, you typically take away less since the job is based on commission. It's important to budget accordingly for the slow times.

• High overhead expenses

With starting a cannabis business, there are overhead expenses that come with selling a physical product. You will want to make sure you strategically budget for these overhead costs. We discuss this more in the startup costs section below.

• You may need to charge sales tax

If you are selling your products in various states, you may be required to charge sales tax. Although this may not impact your financials specifically, it can be a headache to create a process and procedure for this. To learn more about sales tax, check out this article

• Work can be repetitive

You may find creating the same product over and over repetitive and tiresome. One way of avoiding this is to diversify product lines and revenue streams - this will keep things interesting!

• Difficult to build trust with your customer

With starting a cannabis business, there can be minimal face-to-face interaction, which means it can be a lot more difficult to establish trust with your customers. You'll need to go the extra mile with your customer to grab their attention and business.

• Minimal physical activity

A big part of starting a cannabis business is sitting at a desk for the majority of the day starting at your computer. Some may enjoy this, but others may struggle with sitting for the majority of your day without much physical activity.

• Learning Curve

When you start your own business, you no longer have upper management to provide you with a playbook for your roles and responsibilities. You should know the ins and outs of every aspect of your business, as every decision will come down to you.

Players

Big Players

Small Players

Search Interest

Let's take a look at the search trends for cannabis over the last year:

How To Name Your Cannabis Business

It's important to find a catchy name for your cannabis business so that you can stand out in your space.

Here are some general tips to consider when naming your cannabis business

  • Avoid hard to spell names: you want something easy to remember and easy to spell for your customers
  • Conduct a search to see if others in the space have the same name
  • Try not to pick a name that limits growth opportunities for your business (ie. if you decide to expand into other product lines)
  • As soon as you have an idea (or ideas) of a few names that you love, register the domain name(s) as soon as possible!

Why is naming your cannabis business so important?

The name of your business will forever play a role in:

  • Your customers first impression
  • Your businesses identity
  • The power behind the type of customer your brand attracts
  • If you're memorable or not

It's important to verify that the domain name is available for your cannabis business.

You can search domain availability here:

Find a domain starting at $0.88

powered by Namecheap

Although .com names are the most common and easiest to remember, there are other options if your .com domain name is not available. Depending on your audience, it may not matter as much as you think.

It's also important to thoroughly check if social media handles are available.

As soon as you resonate with a name (or names), secure the domain and SM handles as soon as possible to ensure they don't get taken.

Here's some inspiration for naming your cannabis business:

  • High Smoke Collective check availability
  • Grass Trading Co check availability
  • Onset Marihuana Place check availability
  • The Clinical check availability
  • The Liquid check availability
  • Potency Skunk check availability
  • South Mary Jane Trading Co check availability
  • The Raw Smoke check availability
  • Activex Cannabis check availability
  • The Grown Hemp check availability
  • Potent Mary Jane Place check availability
  • Illicit Weed check availability
  • OrdinaryCannabis check availability
  • Adolescent Skunk Pro check availability
  • The Ordinary check availability
  • The Herbal Mary Jane check availability
  • Skunk Place check availability
  • Illicit Smoke Spot check availability
  • Concentrated check availability
  • The Illicit check availability
  • Paralysis Cannabis check availability
  • The Much Ganja check availability
  • WildCannabis check availability
  • Gravitas Cannabis check availability
  • Much check availability
  • Intransigence Cannabis check availability
  • Ganja Spot check availability
  • Therapeutic Mary Jane Pro check availability
  • LiquidCannabis check availability
  • Clinical Hemp Group check availability
  • Chronic Ganja check availability
  • OnsetCannabis check availability
  • Hemp Group check availability
  • The Quality check availability
  • Much Ganja check availability
  • Grass Collective check availability
  • InhaledCannabis check availability
  • The Female check availability
  • Arabic Cannabis check availability
  • South Hemp Co check availability
  • AcuteCannabis check availability
  • The Grown Skunk check availability
  • Callousness Cannabis check availability
  • Crude Codeine check availability
  • The Grown Weed check availability
  • The Legal Smoke check availability
  • Clinical Child Pornography check availability
  • The Medicinal Marihuana check availability
  • Indian Mary Jane Collective check availability
  • The Inhaled Ganja check availability
  • Canibal Cannabis check availability
  • Accidents Cannabis check availability
  • Ravenous Cannabis check availability
  • Heavy check availability
  • Crude Cannabin check availability
  • Ambulance Cannabis check availability
  • More Smoke Collective check availability
  • Legal check availability
  • Acute Mary Jane Pro check availability
  • Female Hemp check availability
  • Indian Skunk Trading Co check availability
  • Clinical Smoke check availability

Read our full guide on naming your cannabis business ➜

How To Create A Slogan For Your Cannabis Business:

Slogans are a critical piece of your marketing and advertising strategy.

The role of your slogan is to help your customer understand the benefits of your product/service - so it's important to find a catchy and effective slogan name.

Often times, your slogan can even be more important than the name of your brand.

Here are 6 tips for creating a catchy slogan for your cannabis business:

1. Keep it short, simple and avoid difficult words

A great rule of thumb is that your slogan should be under 10 words. This will make it easy for your customer to understand and remember.

2. Tell what you do and focus on what makes you different

There are a few different ways you can incorporate what makes your business special in your slogan:

  • Explain the target customer you are catering your services towards
  • What problem do you solve?
  • How do you make other people, clients, or your employer look good?
  • Do you make people more successful? How?

3. Be consistent

Chances are, if you're coming up with a slogan, you may already have your business name, logo, mission, branding etc.

It's important to create a slogan that is consistent with all of the above.

4. Ensure the longevity of your slogan

Times are changing quickly, and so are businesses.

When coming up with your slogan, you may want to consider creating something that is timeless and won't just fade with new trends.

5. Consider your audience

When finding a catchy slogan name, you'll want to make sure that this resonates across your entire audience.

It's possible that your slogan could make complete sense to your audience in Europe, but may not resonate with your US audience.

6. Get feedback!

This is one of the easiest ways to know if your slogan will be perceived well, and a step that a lot of brands drop the ball on.

Ask friends, family, strangers, and most importantly, those that are considered to be in your target market.

Here's some inspiration for coming up with a slogan for your cannabis business:

You Can't Stop Cannabis.

Indian Sens, Medical Sess

The Ideal Cannabis.

Share Moments, Share Cannabis.

I Wish I Had A Cannabis.

Cannabis With Detail

Cannabis Brings Out The Best.

Cannabis Chews 'Em Up And Spits 'Em Out.

Safrole Is What We Do

Medicinal Methylenedioxymethamphetamines Are What We Do

America's Most Trusted Cannabis.

Work Hard, Sativa Harder

Pure Cannabis.

Range Of The Marihuana

You Can't Stop Cannabis.

Cannabis For Everyone.

Indian And Endian

It's My Cannabis!

Therapeutic And Muted

Weed Is What We Do

The eCommerce Business Model

One of the main benefits of operating online is that you are exposed to the entire world, versus just one local area. Rather than depending on foot traffic, you have all the tools at your disposal to create exposure for your store online.

Additionally, there are much lower costs to operate an online store - fewer employees, you can operate from your home, and you get to create your own schedules (yes, holidays included!)

Although you are operating online and have the ability to connect with people all over the world, it's important to consider that you will need to invest marketing money upfront in order to promote your store to the right audience.

Gia Paddock, founder of Boutique Rye explains the 3 reasons why she decided to build an online store:

I wanted to find something I loved but also allowed me to stay home at the same time. While I was working at this local boutique, I realized that there was a lot of sitting around during the day when other people were out working. Therefore, an online business seemed like the best route for a few reasons:

  1. We didn’t have the extra funds sitting around to pay sign a year or two-year lease at a brick & mortar location.
  2. I realized the opportunity to reach a wider audience online compared to the audience of this small local boutique. For us, it seemed like hitting two birds with one stone.
  3. And finally (maybe the most important of all), running it as an online-only business would allow me to stay at home with Riley!
-  
Gia Paddock, on starting Boutique Rye ($10,000/month) full story ➜

🎬 How To Start A Cannabis Business

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How Much Does It Cost To Start A Cannabis Business

If you are planning to start a cannabis business, the costs are relatively low. This, of course, depends on if you decide to start the business with lean expenses or bringing in a large team and spending more money.

We’ve outlined two common scenarios for “pre-opening” costs of starting a cannabis business and outline the costs you should expect for each:

  • The estimated minimum starting cost = $1,052
  • The estimated maximum starting cost = $28,819
Startup Expenses: Average expenses incurred when starting a cannabis business. Min Startup Costs: You plan to execute on your own. You’re able to work from home with minimal costs. Max Startup Costs: You have started with 1+ other team members.
Office Space Expenses
Rent: This refers to the office space you rent out for your business. To minimize costs, you may want to consider starting your business from home or renting an office in a coworking space. $0 $2,000
Utility Costs (office space): This refers to the first month's utility bill for your office space. If you are not responsible for this bill, this would not apply to starting your cannabis business. $0 $150
Office Supplies: Although these may seem like minor costs, things like your desks, chairs, pens, paper, filing cabinets do add up. To avoid these adding up too much, try to be as lean as possible and go paperless! $25 $1,000
WiFi: Whether you work from home or in an office space, WiFi is an expense that's tough to avoid. Although the cost is minimal in most cases, it should be appropriately budgeted for each month! $10 $100
Total Office Space Expenses $35 (min) $3,250 (max)
Equipment & Supply Expenses
Technology Office Equipment: This includes (but is not limited to) physical items such as: laptops, cameras, monitors, microphones, speakers, headsets. Technology needs grow as your company evolves, so to minimize costs, try and only purchase what is needed for you to run your business at the time. $500 $5,000
Total Equipment & Supply Expenses $500 (min) $5,000 (max)
Inventory Expenses
Upfront Costs For Inventory: This includes all upfront inventory you will need in order to launch. Be sure to compare prices of wholesalers to ensure you're getting the best deal and margins remain high. $300 $5,000
Inventory Storage: If you decide to have a physical space for your cannabis business, whether it be used for inventory or as a showroom, you may have monthly rent payment or a large down payment associated with renting/buying the space. $0 $5,000
Package Design: Packaging refers to wrapping and protecting products during distribution, shipping, and sales.Your package design is your customer's first impression of your brand, so it's important you spend some time and energy to get this right from the start.Many businesses design their own packages using design software and tools. There is always the option to outsource this to a design expert, but that route tends to be much more expensive. $50 $3,000
Shrinkage: Shrinkage refers to the loss of inventory at any point between the purchase from your supplier and the purchase by your customer. Although you will try to avoid this at all costs, this does happen sometimes (especially in the learning stages of your business), and it's important to plan ahead financially in case this happens. Fortune states that retail shrinkage costs U.S. retailers approximately 1.4 percent of their total sales. $0 $1,000
Distribution costs: Depending on what distribution plan you choose, expenses such as renting vans, hiring delivery drivers and gas costs can add up. If you are looking to save money upfront, you may want to consider conducting distribution on your own. $0 $750
Total Inventory Expenses $350 (min) $14,750 (max)
Software Expenses
Design Programs & Software: These programs might include the Adobe family of design tools: Photoshop, Illustrator, InDesign and others. This is typically a monthly subscription ranging from $10-$50/mo. $0 $50
Email marketing tool: If you plan to grow your email list and email marketing efforts, you may want to consider investing in an email marketing platform (ie. Klaviyo, MailChimp). We put together a detailed guide on all of the email marketing tools out there + the pricing models for each one here $0 $100
IT Support: IT support installs and configures hardware and software and solves any technical issues that may arise.IT support can be used internally or for your customers experiencing issues with your product/service.There are a variety of tools and software you can use to help with any technical issues you or your customers are experiencing. This is a great option for businesses that do not have the means to hire a team of professionals. $150 $2,000
Accounting & Invoicing Software: It's important to have an accounting system and process in place to manage financials, reporting, planning and tax preparation. Here are the 30 best accounting tools for small businesses. $0 $50
Project Management Software: You may want to consider using a project management and collaboration tool to organize your day-to-day. This can also be very beneficial if you have a larger team and want to keep track of everyones tasks and productivity. For a full list of project management tools, check out this full list here. $0 $25
Internal Communication Tool: If you plan to have multiple members on your team, you may want to consider an instant message tool such as Slack or Telegram. The cost is usually billed per month (approx $5/user/month) or there are freemium versions available on many platforms. $0 $20
Social Media Management Tools: If you plan to do social media marketing for your cannabis business, you should consider investing in a social media automation or publishing tool. This will save you time and allow you to track performance and engagement for your posts. Here is a list of 28 best social media tools for your small business. $0 $50
Payroll Software: The main purpose of payroll software is to help you pay your team and track each of those payments (so that you don't have to do it manually). If you do not have any employees or have a very small team, payroll software may not be necessary at this stage. Here are the 11 best payroll tools for small businesses! $0 $200
Online data storage: It's important to make sure the information for your cannabis business is stored and protected should something happen to your computer or hard drive. The cost for this is affordable and depends on how much data you need to store. To learn more about the different options and pricing on the market, check out this article. $0 $299
Total Software Expenses $150 (min) $2,794 (max)
Website Costs
A Domain Name: Your domain name is the URL and name of your website - this is how internet users find you and your website.Domain names are extremely important and should match your company name and brand. This makes it easier for customers to remember you and return to your website. $12 $200
Email hosting: Email is a critical piece for running your business. Once you have your domain name, you will want to set up email accounts for each user on your team. The most common email hosts are GSuite (typically starting at $6+ per user, per month) or Microsoft Office (typically starting at $5+ per user, per month). The number of email accounts you set up will determine the monthly cost breakdown. $5 $75
Total Website Costs $17 (min) $275 (max)
Advertising & Marketing Costs
Customer Research & Surveys: Many cannabis business's conduct industry and consumer research prior to starting their business. Often times, you need to pay for this data or hire a market research firm to help you in this process. $0 $300
Affiliate Marketing Commission & Fees: If you want to increase revenue for your cannabis business, affiliate marketing is a great way to promote your product to a new audience. When determining affiliate commission rates you will offer, you will want to take into account the price and margin for your product to ensure affiliate marketing is worth it for your business. According to Monitor Backlinks, the average affiliate commission rate should be somewhere between 5% to 30%. To learn more about how to set commission rates, check out this article.. $0 $250
Influencer Marketing: Partnering with like-minded influencers is one of the most effective ways to grow your social media presence. Many small businesses simply gift a free item in exchange for an influencer post, or pay the influencer directly. $0 $750
Press: If your business and story is unique enough, press and media attention may come to you, but odds are, you may need to do your own outreach and budget for this. We put together a guide here that discusses different press opportunities (both free and paid). $0 $500
Google Ads: With Google Ads you have the ability to control how much you spend by simply setting a monthly budget cap. Additionally, with these ads you only pay for results, such as clicks to your website or phone calls! It's okay to start with a small budget at first and make changes accordingly if you see valuable returns. $0 $300
Facebook & Instagram Ads: With Facebook and Instagram ads, you set your budget and pay for the actions you want (whether that be impressions, conversions, etc).You can learn more about pricing based on your impressions here. $0 $350
Total Advertising & Marketing Costs $0 (min) $2,450 (max)
Other Expenses
Credit Card Processing Fees: If you process credit cards then you will need to deal with interchange fees - which is usually around 3% of total charges. These fees are often forgotten about and can hurt cash flow if not taken into account. $0 $300
Total Other Expenses $0 (min) $300 (max)
Total Starting Costs $1,052 (min) $28,819 (max)

Raising Money For Your Cannabis Business

Here are the most common ways to raise money for your cannabis business:

Bootstrapping

You may not need funding for your cannabis business.

In fact, many entrepreneurs take this approach when starting their own business, whether they have a little amount of cash or a substantial amount to get started.

So what exactly does the term "bootstrapping" mean?

This method essentially refers to self-funding your businesswithout external help or capital and reinvesting your earnings back into the business**

Bootstrapping means building your company from the ground up with your own, or your loved ones, personal savings and reinvesting all earnings back into the business

Here are some tips to consider when bootstrapping your business:

  • Use your savings as your capital - one of the best ways to bootstrap your business is to collect your savings and use them as startup capital. This will also help you avoid using your personal or business credit cards when getting started.
  • Determine exactly how much capital you need and how much capital you have to get your business off the ground. Generally, when bootstrapping your business, you may want to consider starting a business that involves less startup capital.
  • Consider starting a business that will generate immediate returns so you can put money back into the business
  • Be as lean as possible - this refers to cutting down expenses as much as possible, such as payroll, fancy software tools, unnecessary travel, renting an office, etc
  • Consider outsourcing instead of hiring - in the beginning, you may not need to hire someone permanently to help run your business. It tends to be much less expensive to outsource work to a freelancer and hire someone permanently down the road!

Want to learn more about bootstrapping your business? Check out this article

Crowdfunding

For your cannabis business, a common way to raise money is through crowdfunding.

So, what does it mean to crowdfund your small business?

Crowdfunding refers to funding a project through many individual investors.

Here are some items to keep in mind when planning your campaign:

  • Sell more than just your product. Sell your passion, your vision, and your story.
  • Be real. Give your community honest details about your product.
  • Treat your audience as your friends (not just potential customers)
  • Put together a great presentation - it will attract people quicker.

To launch a successful crowdfunding campaign, you first need to select the type of crowdfunding platform to host your campaign.

Here are the most popular crowdfunding platforms to raise money on:

Kickstarter

Funding platform for creative projects.

Businesses using Kickstarter:

51 successful businesses are using Kickstarter ➜

Get Kickstarter ➜

Indiegogo

Crowdfunding platform for innovations in tech and design.

Businesses using Indiegogo:

19 successful businesses are using Indiegogo ➜

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Get Indiegogo ➜

StartEngine

Crowdfunding platform that has helped more than 350 companies raise $175M+ from a community of over 250,000 prospective investors.

Businesses using StartEngine:

1 successful business is using StartEngine ➜

Get StartEngine ➜

We connected with one of the most successful Kickstarter campaigns, Photobooth Supply Co, and asked founder, Brandon Wong to give us some insight on his strategy:

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Product first, campaign second

So with all of those positive benefits of the platform figured out, we wanted to make sure we had the product itself in the right place before we launched.

We’ve been working on Salsa for a long time now and wouldn’t have felt comfortable revealing the ability to pay for it until we hit a very important milestone. We had a final prototype.

Doing all of the sourcing and actual production is secondary—there was absolutely no way we could have gone public without people being able to see real photos (and touch in person) a functioning prototype.

This meant that we had to do all of the development before we ever saw a cent.

Finding backers in the real world

We launched the product at our annual Booth Summit, which is a convention for photobooth owners to get together and learn from experts in the field. Launching a product in a receptive environment is generally considered to be a good idea. The same was definitely true for us!

We had a crowd of people who had just told us they were dedicated to growing their business… and we had the chance to offer them a way to do just that. I really can’t emphasize enough how important it is to make products that matter for people who will care about them.

This opportunity to see the product in real life was an essential component for our launch, but it might not be the same for you. I think it just shows how essential having a great prototype is. People love to touch and feel what they’re buying, if you’re talking about something physical… you should be able to show a prototype before you ask for money.

Building excitement with even the smallest backers.

We knew that we wanted to have a ton of incentives for early backers so that they’d be rewarded for taking a leap of faith on a new photobooth.

We’re obviously not making a whole lot of money on that first $1999 tier. But it enabled people to be part of something fun.

Every $1999 backer is always going to be able to say, not just that they got a great deal, but that they were one of the first to get on board. It means a lot more than a discount code expiring—just look at how frustrated people are on Twitter when a limited stock of rewards is secretly gobbled up.

Kickstarter doesn’t reveal the names of backers, but it humanizes them. And it just adds to the fun of getting your own spot! Even for someone backing now, they’re able to say that they were an early adopter.

Delivering on our promise

One of the most common critiques of Kickstarter items is that they either never show up or that they take years. I wanted to make sure that our timeline was easy to deliver and also reasonable.

Nobody deserves to wait two years for your product after they pay for it. I felt like we needed to offer a much quicker turnaround than that. We launched on Black Friday 2018 with an estimated delivery of April 2019.

That’s under 6 months and much lower than the average Kickstarter! The most important thing is that we will be able to meet that timeline. You can’t go around promising delivery dates and missing them, this isn’t a consumer product.

Anytime you’re working with the events industry you have to be very transparent and up front about timelines. A bride who books a photobooth needs it to show up on her wedding day. It’s non-negotiable!

-  
Brandon Wong, on starting Photobooth Supply Co. ($300,000/month) full story ➜

VC Funding

VC funding is a traditional and long process, but an effective way to raise money for your business.

The term "VC funding" refers to venture capital firms investing in businesses in exchange for equity.

The VC's (venture capitalists) are an individual or small group investing in your business and typically require substantial ownership of the business, with the hope of seeing a return on their investment.

VC's are typically the best approach for businesses with high startup costs - where it would be very difficult to raise the money on your own or through a loan.

When deciding whether to take this approach, it's important that you have a few things in place first, and know what you're getting yourself into:

Determine if your business is ready

Having an idea is not enough to get VC funding.

Typically, VC's will check to make sure you have these things in place prior to closing any deal:

  • An MVP (Minimal Viable Product)
  • A founding team with all proper documents in place (articles of organization, business formation)
  • A validated idea with actual customers buying your product/service

Get everything in place and build a pitch deck

A VC individual or firm will be expecting a fine-tuned presentation that gives an overview of your business.

Here's what you should consider including in your pitch deck:

  • Management team, their previous experience + current roles in the business
  • Market challenge and solution
  • Company financials - including a P&L statement, cash flow statement, and projections
  • Company progress
  • Investment amount - how much do you need and why?

Research the right VC to fund your business

Research the types of VC investors out there and what niche they focus on.

Then, put together a list of target VC's you want to approach and your strategy around setting up meetings.

Be sure you have everything in place (as discussed above) before setting up any meeting!

Make sure the terms and expectations are right for your business

Committing to VC funding is a big deal and a decision that should not be made lightly.

Although the money and experience from VC's can help your business quickly grow, you are also giving away a stake in the company, and the money comes with strings attached.

Be sure you do your due diligence in finding the right investor - one that truly believes in the growth and success of your business.

What Skills Do I Need To Succeed In Starting A Cannabis Business?

As a cannabis business, there are several essential skills and characteristics that are important to identify prior to starting your business.

Let’s look at these skills in more detail so you can identify what you need to succeed in your day-to-day business operations:

Business Savvy Skills

When starting a cannabis business, there are a few fundamental business skills you will want to learn in order to be successful:

  • Leadership and training skills: A great team starts with YOU. Make sure you have all company policies and training procedures in place prior to hiring your team
  • Decisive and self-confident: Over the course of your career, you will need decisions that could impact your business significantly. It's important you are able to think clearly and rationally about these decisions.
  • Ability to understand the financials: You don't need to be an accountant, but it is important that you are able to clearly understand and define metrics such as expenses, revenue, profit, margins, COGS, etc.
  • Strategic Thinking: Setting clear goals and benchmarks, identifying opportunities, risks. Ability to effectively communicate these insights to your team.

These are a few of many business savvy skills you should have (or work on) when starting a cannabis business.

For a full list, check out this article here.

Customer Service Skills

Friendly communication with customers and the ability to address service issues is a critical part of the job.

Here are some customer service skills you may want to consider prior to starting a cannabis business:

  • Professionalism: The way you act, present yourself, and respond to situations all leave an impression on your customer. It's important to stay professional at all times when handling customer requests or issues.
  • Problem-solving: When issues arise, it's important that you are able to think quick on your feet and address the situation with a calm and clear solution
  • Friendly-manner: This is an obvious one, but customers truly appreciate someone that can respond in a quick, efficient, and friendly manner.
  • Proficient in writing: These skills include the ability to write well-crafted emails, service tickets, and any other programs used by the business (ie. chat functions, SMS texting)

Self Motivation Skills

Self motivation and discipline skills are critical in order to become successful in this field.

It's likely that you will find yourself starting and running your cannabis business from home, which could mean there are more distractions for you.

Here are the basic skills needed for self motivation & discipline:

  • Becoming a self starter: It's important that you are capable of independently completing a task without the help or direction of anyone else
  • Listening and following directions: When you are given direction by others, it's critical that you are able to follow directions and ask the right questions in order to get your job done
  • Taking the initiative in problem solving: Instead of taking the easy route, you'll need to learn to troubleshoot issues on your own as much as possible.

Advice For Starting A Cannabis Business

We've interviewed thousands of successful founders at Starter Story and asked what advice they would give to entrepreneurs who are just getting started.

Here's the best advice we discovered for starting a cannabis business:

Bjorn Dawson, founder of Grobo ($250K/month):

We didn’t charge nearly enough. When we finally had the product in production, we were losing hundreds of dollars on each order.

Read the full interview ➜

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Ellis Smith, founder of American Cannabis Company ($150K/month):

Set high hard goals with supporting clear goals to ensure your success.

Read the full interview ➜

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Write a Business Plan

Writing a business plan from the start is critical for the success of your cannabis business.

Why?

Because this allows you to roadmap exactly what you do, what your overall structure will look like, and where you want to be in the future.

For many entrepreneurs, writing out the business plan helps validate their idea and decide whether or not they should move forward with starting the business.

You may want to consider expanding upon these sections in your business plan:

  • Executive Summary: Brief outline of your product, the market, and growth opportunities
  • Overviews and Objectives: Overview of your business, target customers, and what you need to run your business
  • Products and Services: Specifics on the products and services your business will provide
  • Market Opportunities: Analysis of customer demographics, buyer habits and if your product is in demand
  • Marketing: Outline of your marketing plan and how you plan to differentiate yourself from other customers
  • Competitive analysis: Analysis of your competition and the strengths and weaknesses therein
  • Operations: Hierarchal structure of the company and what it will take to run the business on the day-to-day
  • Leadership Team: Detailing roles and responsibilities of each manager based on their specific skill-set
  • Financial Analysis Understanding of all expenses, operating budgets, and projections for the future.

Learn more about how to write a business plan here

Determine Which Business Bank Account You Need

There are hundreds of banks out there, and it can be overwhelming to find one that's right for your business.

Here are some factors you may want to consider:

  • Location - Is your bank close enough that you can easily make deposits or get cash?
  • Low Fees - Make sure to understand any and all fees associated with setting up and maintaining your bank account. Ask for a list - banks usually try to keep this hidden and in the fine print.
  • Online Banking Services - Make sure you can easily navigate through your online portal and you have easy access to everything you need.
  • Line of Credit - What do your options look like (even if you don't need this now, you may need this down the road).
  • Every bank has something that differentiates them from the rest, so make sure whatever that is applied to your needs and values.

Check out this list of the 13 Best Banks for Small Business in 2020 and what makes them so unique.

Setting Up Your Cannabis Business (Formation and Legal)

When it comes to setting up your business, you may find yourself in a place where you have to make some financial and legal decisions.

The first thing you'll want to decide on is whether you want to be an LLC, S-Corp, or C-Corp.

These three options are found to be the most common when starting a small business, and all serve to protect your personal assets and also provide you with certain tax benefits.

  • LLC: All income and expenses from the business are reported on the LLC personal income tax return.
  • S corp: Owners pay themselves salaries + receive dividends from profits.
  • C Corp: C Corps are separately taxable entities that file a corporate tax return (Form 1120). No income tax is paid at the corporate level and any tax due is paid at the owners individual expense.

Depending on where you're conducting business, you'll also want to consider securing the proper permits, licenses and liability insurance.

Learn more about securing the right permits and licenses ➜

Need to start an LLC? Create an LLC in minutes with ZenBusiness.

How Do I Pay Myself As A Small Business Owner?

Most entrepreneurs start a business to do something they love- but at the end of the day, you still have bills to pay (maybe now more than ever).

But it's important to strike the right balance - if you pay yourself too much, you could be putting your business at risk.

There are two common ways to pay yourself as a business owner:

1. Owner's Draw

Many entrepreneurs pay themselves through an owner's draw. This means that you are technically sean as "self-employed" through the eyes of the IRS and are not paid through regular wages.

At the point that you collect money from the draw, taxes typically are not taken out - so make sure you are prepared to pay these taxes once you file your individual return.

As an owner who takes a draw, you can legally take out as much as you want from your equity.

This type of compensation is suited for Sole props, LLCs, and partnerships. If you’re an S corp, you can pay yourself through both a salary and draw if you choose.

2. Salary

If you decide to pay yourself a salary, you will receive a set and recurring amount. This will be taxed by the federal government and the state you reside in.

The reality is that it can be really complicated to set your own salary, so we have some tips for you to consider:

  • Take out a reasonable amount that allows you to live comfortably but also sets your business up for success
  • Consider the number of hours you are working weekly + the type of duties you are performing.
  • Set your salary based on your industry-standard, location, and profits (or projected profits)
  • Look at your P&L statement: Deduct your own pay from that amount. This is important so you can first tackle important business expenses, and then pay yourself from the amount leftover.
  • Pick a payroll schedule (and stick to it)! In the US, it's most common to pay yourself and employees twice a month.

https://media.giphy.com/media/xT0xeLTRncS90ptpfi/giphy.gif

To learn more about how to pay yourself and what is a reasonable amount, check out this article.

How To Price Your Cannabis

One of the most challenging aspects to starting a cannabis business is determining how much to charge for your cannabis.

When businesses under-price their product, this can be extremely detrimental to their bottom line and reputation.

Often times, businesses under-price their products to drive demand and volume, but that last thing you want is for customers to view your product/service as "cheap." Additionally, this can have a big impact on the type of customer you attract, which can be difficult to recover from.

On the other hand, when businesses over-price, this tends to be just as damaging to the business.

When customers buy, it's likely that they will explore the internet and look at other competitors to ensure they're getting the best value + deal. This is why it's so important that you research your competition and understand where you land in the marketplace.

Here are some factors to consider when pricing your product:

Understand your customer

It's important that out of the gates, you identify the type of customer you want to attract and how much they're willing to pay for your service. One great way to do this is by surveying your customers. Here are some important items you'll want to takeaway:

  • Customer demographic: Age, gender, location, etc.
  • Buying habits of your customer: What they buy + when they buy
  • Level of price sensitivity with your customer

All of these segments will help you identify the type of customer you're attracting and how to price your product accordingly.

Understand your costs

When pricing your cannabis, it's critical that you first identify all of your costs and consequently mark up your cannabis so you can factor in a profit.

The actual cost of your cannabis may include things like:

  • The actual cost to make the product (ie. raw materials, supplies, manufacturer).
  • Shipping + overhead fees
  • Rent
  • Operating costs to run your business

You may want to consider creating a spreadsheet with every single expense involved in operating/owning your business. This will give you an idea as to what you need to generate in order to at the very least, break-even and will help you price your products to factor in a profit.

Create revenue goals

When determining the price of your cannabis, you'll want to create goals for revenue + how much profit you want your cannabis business to make.

This process is simpler than you may think:

  1. Think about your breakeven cost (by completing the above step).
  2. Create a revenue goal based on your break-even cost
  3. Evaluate the # of items you plan to sell in a given period (make sure this is a realistic number)
  4. Divide your revenue goal by the number of items you plan to sell

This figure will help determine your estimated price per product in order to meet your revenue goals.

Evaluate your competition

The last piece in determining how to price your cannabis is by simply looking at your competition.

The best way to do this is by finding like-minded businesses that offer product(s) with similar perceived value. Then, you can compare prices of the different businesses and determine where your cannabis fits best in the marketplace.

All of these factors play an equal part in pricing your cannabis, so it's important you evaluate each one individually to come up with an accurate price that will help optimize your business from the start.

Understanding Your Costs

Example from Ishan, founder of Ugly Duckling

First objective: profitability

Our profitability is OK at this point but definitely not where it should be yet. To this day I have not paid myself a regular salary yet...and it’s been 4 years!

The problem is not the cost of goods which are well under 20% of sales, which is good by any standard. The problem is fulfillment costs. In 2018 we transitioned from our first fulfillment company to a much bigger company. We did this because we wanted to provide faster shipment speeds and a better quality of packaging. In hindsight, we chose a company which would have been more suitable for a larger company with bigger volumes. We ended up being tied in with some pretty large minimum monthly payments. So currently fulfillment costs are currently around 45% of sales...way too high.

We are now looking to transit to another fulfillment center. Our target is to get our fulfillment costs down to around 30% of sales which I believe from what I have researched, is possible.

Just to be clear, when I say fulfillment that includes transportation costs also - FedEx, USPS, etc. Not just storage, picking, and packing. I am pretty sure that it is possible to get fulfillment costs down even lower, and I suspect that some large pro sellers on amazon.com work with around 20-25% of sales.

So our target P+L for 2020 looks something like this:

  • Cost of goods, including inbound freight and clearance - around 22% of sales.
  • Fulfillment - around 30% of sales.
  • Digital Advertising & Promotion - around 15% of sales.
  • Other marketing and office costs, including salary costs - around 10% of sales.
  • That would leave us around 23% of sales - enough to pay me a liveable salary and for the company to make a profit and finance future growth.

That's the first objective for 2020: to right-size the P+L so that we are profitable at our current sales level

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Ishan Dutta, on starting Ugly Duckling ($60,000/month) full story ➜

Gross Margin Calculator: How to Calculate The Gross Margin For Your Cannabis

Our calculator is designed to be simple and easy to use.

The goal is to help you set realistic expectations and understand what is considered a healthy gross margin for your cannabis business.

Calculate your gross margin and profit margin here.

Design A Prototype

Turning your idea into a reality can feel like a daunting task - but it's critical that you have an idea of what your product will look like (even if it's just a sketch) prior to finding a manufacturer.

Here are some common ways you can design your prototype:

  • Draw Your Initial Design on Paper
  • Form pieces of fabric together
  • Consider Taking A Generic Product And Putting Your Own Brand On It
  • Try Making the Product Yourself
  • Consider Building A Prototype With A 3D Printer

To learn more about how to design and prototype a product, check out our latest guide here.

Bjorn Dawson, founder of Grobo dives deep into the process of designing and prototyping their product:

The Grobo Premium development process started while we were in Shenzhen, China at the HAX Hardware Accelerator. We had decided to pivot into the cannabis space only 2 weeks before moving to China so we showed up with an idea and the knowledge gained from designing the Grobo Pods, our first product that never launched.

China is an amazing place to prototype a product. Honestly, they can turn around most any custom components you need within 48 hours. On top of that, they have massive electronic markets filled with almost any component you could need for a product. That access to goods allowed us to quickly test many different designs.

We started by creating a basic Product Requirement Document (PRD) outlining what the product needed to do. Then, we began to prototype. Our first prototypes were built out of foam core boards to check our general assumptions of product size and how each of the components would fit together. Once we settled on an approximate form factor, we moved into laser cutting parts to get a bit closer to the design while having an industrial designer create renderings of what the finished product could look like. This whole process took about 5 months to complete.

how-we-launched-a-130k-month-automated-home-growing-box Foam prototypes / First looks like prototype / Finished MVP prototype

From there, it took another 18 months to truly get into mass manufacturing. We opted to operate our own assembly facility which, in retrospect, slowed us down considerably. We spent a large amount of time and money on setting up our 11,000 sq ft facility. Learning how to make jigs, assembly procedures, hire assembly technicians, etc. We thought that producing in the house would lead to cost savings, but we struggled to track inventory properly and ramp up quickly enough. Today, we have moved all assembly to a contract manufacturing partner. They handle the ordering, assembly, quality control issues, inventory and more. That allows us to focus purely on marketing and R&D which are our strengths.

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Bjorn Dawson, on starting Grobo ($250,000/month) full story ➜

How To Find A Supplier For Your Cannabis Business

Here are the steps to consider when finding a supplier/manufacturer:

Know your design

One very critical step to finding the right supplier is having an initial idea of what your design/product will look like.

Sketching is one of the most simple ways to get started in the design phase.

What's great about sketching is that you can practically do this anytime, anywhere - even on the back of a napkin.

To get started, all you need to do is pick up a pen and paper and start drawing - or if you are working on a virtual/software product this can be a diagram that outlines the user interface or experience.

Decide your supplier type

You'll want to identify the type of supplier you are looking for.

Here are some questions you may want to ask yourself prior to searching for a supplier

  • Are you looking for a manufacturer to produce your product idea?
  • Do you want to find a supplier that can simply purchase existing products for you?
  • Do you want a drop-shipper to supply and fulfill orders?
  • Do you want a domestic supplier or an overseas supplier? Read more about the pros and cons of each here

Where to start your search

Once you have an understanding of what type of manufacturer/supplier will be best to bring your idea to life, there are several areas you can start your search:

Domestic Suppliers

Overseas Suppliers

Manufacturing Your Product In House

It's also very common to manufacture your cannabis on your own - either from your home or in a commercial space.

In order to get the product right, you may want to consider experimenting with different designs and recipes until you find the perfect one.

Some founders choose to manufacture their product in-house so that they can control quality, manage costs, and easily handle production/logistics.

Down the road, you can always choose to outsource your cannabis.

Leslie Eisen, founder of AlmondClear discusses how to manufacture products in house

If you want to start a line of unique products, then you have two basic options: you can make them yourself, or you can find a manufacturer to work with that creates custom formulations for their clients.

I knew that I was trying to build a larger-scale business and that the home-made model wasn’t right for me, so I had to find the right manufacturing partner. It took a lot of research, phone calls, and emails before I found the laboratory that met my needs.

I wanted to create unique products (as opposed to private label), so I worked with the manufacturer’s chemist who specializes in skin care formulations. This process takes some time!

First, you have to tell the chemist what kind of product you’re looking for, the ingredients that you want to include or leave out, and what you want the final product to look like/feel like/smell like, etc.

Then, the manufacturer sends you the first sample, you try it out or give it to others to try, and then provide feedback for revisions. In my case, the first two products came together fairly easily because I only needed to make small changes to stock formulations.

There are many, many rules and regulations around cosmetics and skin care products. If you want to sell products that contain FDA regulated ingredients then you have to register and get a permit.

My products aren’t FDA regulated, so I didn’t have to go through this step, but I did have to be aware of the many guidelines and standards around labeling and safety warnings. Some people hire a lawyer to help them through this process, but my manufacturer was able to guide me through the regulatory process.

The entire process, from researching labs to work with to having the first finished products shipped out to me, took around six months.

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Leslie Eisen, on starting AlmondClear ($15,000/month) full story ➜

Purchasing Inventory For Your Cannabis Business

When first starting out, it's important to start small with your overhead to get a gauge for what people want.

Just remember - if you order a line of items that don't sell, it's nearly impossible to recoup the money lost.

Buying the right inventory takes research and planning in order to get it right.

  1. Identify your target audience: Identify the age, gender, annual income that you will be selling to. This is a defining factor in ordering the right inventory that will sell.
  2. Research your competition: Conduct market research and identify the different types of styles, price points, and materials being used. This will help you see what's trending and ways that you can improve/stay ahead of the competition.
  3. Create an inventory wishlist: Identify what you need for the launch of your business and create a budget that you will stay within. Remember, it's okay to start small.
  4. Find a supplier Make sure to first compare prices and analyze different options.
  5. Delivery timing: Schedule the inventory delivery to match with seasonality and trending buying seasons

Pro-tip: It's easy to become biased based on your own fashion preferences on what types of shoes/apparel to purchase. This is where a lot of fashion businesses go wrong. It's important to base purchase decisions on current buyer behavior, trends in the market, and specific to your niche.

Erin Hooley, founder of Bailey's Blossoms tells us how poor inventory projections led her to lose over $2M

When we first launched Peyton Bre we did so in a social or direct sales model.

Through poor inventory projections we were forced to change models but only after losing $2 million dollars.

It was a devastating time for us and one we were not sure we could survive.

I have since become very intentional about the way that we project our inventory needs and we continue to refine that quarterly and even monthly. We have created a KPI for the cost of goods sold to help us hold ourselves accountable.

Ultimately, the better we manage our inventory the less we have need to discount and the healthier our profit margin becomes.

This is, of course, a very high-level overview of the importance of inventory control.

To see the full breakdown on how to manage inventory, check out my guide over on my blog..

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Erin E Hooley, on starting Bailey's Blossoms ($0/month) full story ➜

🚀 How To Launch Your Cannabis Business

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Build A Website

Building a website is imperative when launching your business, and with the right tools in place, this can be a simple task to check off the list (without having to hire someone).

  1. Pick a domain name that's easy to remember and easy to type
  2. Choose a Web Hosting Plan (ie. Shopify, Squarespace)
  3. Make sure you choose the right theme and design
  4. Implement the proper page structure (ie. about page, contact page, pricing etc)

To learn more about how to build a stellar website with little stress, we give you all the details on this step-by-step guide.

Web Design

Once you have chosen the domain, web hosting, and platform, it's time to get started with the design phase.

Themes are a great way to produce the fundamental style and identity of your website - this includes everything from your font design to your blog post styles.

One of the best ways to get started is to simply explore the various themes (free or paid depending on what you're looking for) and test them on your site.

If web-design really isn't in the cards for you, you may want to consider outsourcing a web designer to help bring your vision and brand to life.

Launch Strategies For Your Cannabis Business

There are various different ways you can launch your cannabis business successfully.

Here are a few different strategies to get customers excited about your cannabis business.

  • Build hype with a landing page: you can effectively do this through waiting lists, discounts, countdown timer etc
  • Create a teaser video: even just a 30 second video is a great way to exposure for your cannabis business, and possibly even go viral
  • Reach out to influencers: The right influencer for your product has the ability to reach your audience with just one post, and because of their loyal following, this could lead to a big return for you.
  • Get Press: Whether you plan a PR stunt or get exposure through a popular news outlet, this is a great way to attract initial customers
  • Launch on popular sites: A great way to get buzz about your cannabis business is to submit your launch to popular startup sites.

Here are a few popular sites to launch on:

Learn more about how to launch your business successfully ➜ here

Bjorn Dawson, founder of Grobo dives deep into the process of launching the business:

From 2014 to 2016 it was all about grants. From 2016 onwards it was all about investors since the government & pitch competitions were not yet ready for cannabis companies.

Within the first week of starting Grobo, we won a $5,000 pitch competition which provided the initial capital to start R&D. Only 3 months later, we won a $25,000 pitch competition and honestly thought we were rich. This was a huge amount of money at the time. We leveraged this to secure a government grant for another $30,000 and then another $30,000. Although Canada’s investing community is smaller than elsewhere, we do have good access to grants.

In late 2015, we were accepted into the HAX Hardware Accelerator and they invested $100,000 USD into Grobo. From there, we have closed millions of dollars from investors in Canada, the USA, and Hong Kong. With a product like ours, this funding was required to get us through the first years of R&D.

In late 2016, we revealed our product to the world, launching a crowdfunding campaign on our website. We worked with a PR firm that helped us get an article written by the Canadian Press. That article was syndicated to HuffPost, Mashable, and more. Within one month we had pre-sold nearly 400 units.

That was insanely exciting, but we would soon realize we made three critical mistakes:

  1. We opened up orders to the world. Shipping to everyone wasn’t going to be possible. We eventually realized that and refunded all customers outside of Canada and the USA.

  2. We promised we would ship much too early. It took us another year to begin shipping beta units and a total of 18 months to really start shipping.

  3. We didn’t charge nearly enough. When we finally had the product in production, we were losing hundreds of dollars on each order. That’s not to mention all the scrap parts we ended up with and any returns we accepted.

Launching a pre-order campaign is an amazing way to gauge interest, but you must 100% know your actual costs before launching. Building in a buffer is even better!

Check out our launch video that was viewed millions of times:

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Bjorn Dawson, on starting Grobo ($250,000/month) full story ➜

Make Sure You Get The Package Design Right

The way you package your cannabis business is often the first impression your customer has - so it's important to get it right.

You may want to ask yourself these questions:

If my product is on a shelf next to hundreds of other similar products:

  • Will my cannabis business stand out?
  • Will the branding/packaging create a connection with my customer, and hence, lead them to buy?

There are hundreds of tools you can use to help with packaging and design:

  • Canva - Allows non-designers to create beautiful Instagram/Pinterest posts, flyers, business cards, etc.
  • Stickermule - High quality custom stickers you can include on or in your packaging.
  • Noissue - Custom tissue paper and compostable mailers
  • Rollo Label Printer - A great tool to print all shipping labels at home

Sheets & Giggles explains the motive behind their "Premium Unboxing Experience"

I had a particular vision for our packaging centered around one goal: because we were a DTC company and wouldn’t do physical retail in year 1, we needed to focus entirely on an incredible unboxing experience that made the product feel as premium as possible.

Outside: a white box, nice wax coating, logo front and center with no other copy, easy to open, nice and sturdy.

Inside: make people smile from the get-go, have a social call-to-action, include free extra surprises (a knapsack that wraps the sheets and an eye mask), put funny copy all over the place, and add a donation bag that people could use to donate their now-defunct cotton sheets (sheets & blankets are the #2-most-requested item at shelters behind socks).

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Colin McIntosh, on starting Sheets & Giggles ($200,000/month) full story ➜

🌱 How To Grow Your Cannabis Business

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Consider Selling On Amazon

In addition to selling your products directly on your site, you may want to consider selling on Amazon to reach a wider audience and attract new customers.

Here are some pros and cons of selling on amazon:

Pros

  • Easy and seamless process to get your product listed on Amazon
  • There are roughly 100 million thoroughly committed prime customers, so you're bound to tap into new business
  • Can help grow your business exponentially and reach new audiences

Cons

  • You may encounter some "copycats" and counterfeit products
  • Amazon owns the relationship with the customer (you lose control over product reviews + customer service)
  • If you already have a low-markup, amazon may not wrth your while and you could end up losing money
  • Commissions and listing fees are high - it's easy to lose control of your offering

Follow these instructions to get your product listed on Amazon or check out the video below on how to get started:

Cory Stout, founder of Woodies ($250K/mo) provides us with specifics on how to rank better on amazon:

Our main product is walnut wood sunglasses that I sell for $25 on Amazon and Woodies.com.

I dedicated myself to becoming an Amazon expert. I listened to all the podcasts and read all the blog posts I could find. Shoutout EcomCrew I took the basic fundamentals that are out there and I added a couple of my own twists.

Amazon brings me, 100 brand new customers, every day for very little acquisition cost. If I tried that on my own, it would take a TON of work and it wouldn’t be nearly as effective as Amazon, so I took the easy road on this one.

Here's an article I wrote on how to rank better on amazon (30+ Tips):

5/5: ESSENTIAL

  • Beautiful images (minimum 5 images) especially lifestyle images I use UpgradedImages.com for product photography (hey Ken!)
  • Keywords in your title (but it still needs to sound human)
  • Competitive price (contributes to high conversion rate)
  • NOT having 1-star reviews
  • DON'T STOCKOUT: it's such a killer and if you DO stockout, definitely DON'T raise your price right before you do, if anything LOWER your price for the last 10-20 units before you stockout, each ASIN has a 'memory' for when you do get back in stock so that will help you regain ranking quickly
  • DON'T VIOLATE AMAZON TOS: just don't
  • Perform QC on your stock before you send it in (I sent in a wrong box once and I had to 'remove' over 3,000 pieces so I could sift through them and remove the 150 contaminated pieces 0/7 would not recommend

4/5: Pretty Friggin Important

  • Minimum 10 5-star reviews (do this before you do anything below this)
  • Well optimized PPC campaigns (could do a whole post on this, keep ACOS under 40%) here's a screenshot of some of my campaigns I use a combination of manual campaigns with exact phrases and high bids...and auto campaigns with a broad range of products and very low bids
  • Turning on FeedbackGenius for auto review requests (it's not as good as it used to be, but it's still worth it)
  • Get a trademark and get Brand Registry, this protects you from hijackers and other unscrupulous sellers
  • Quick response to customer messages (under 12 hours) here are my stats my mom does all my customer service "Employee of the Year" status
  • Drive outside traffic (amazon loves outside traffic because they don't have to spend so much to acquire customers) Facebook, Instagram, and Google Adwords are the usual suspects
  • Use ocean shipping to save mucho $$$ on unit costs (use flexport)

Read more about amazon tips here.

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Cory Stout, on starting Woodies ($190,000/month) full story ➜

🏃🏼‍♀️ How To Run Your Cannabis Business

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How To Retain Customers For Your Cannabis Business

Retaining customers is one of the most effective ways to grow your cannabis business.

Oftentimes, it's easy to find yourself focusing on generating new customers, vs retaining your current ones.

Look at it this way - you are 60-70% more likely to sell a new product to an existing customer than you are a new customer.

That's not to say that finding new customers and revenue streams is not important, however, the easiest (and most inexpensive) source of new revenue is right there in front of you.

Here are some ways you can retain customers for your cannabis business:

  • Responding to comments on social media
  • Send discounts (or freebies) to loyal customers
  • Provide valuable content, for free
  • Write a hand written thank you note
  • Provide awesome customer service and build relationships with customers

To find out more tips and tricks on retaining customers, check out this article ➜ here

Bjorn Dawson, founder of Grobo dives deep into the process of attracting and retaining customers:

I personally lead our marketing strategy right now and we’re constantly testing new approaches to sales. There are a few key strategies that have worked really well for us:

Our community

This is the big one. Very early on, we started a community called allgrowers.com. It’s a place where anyone can talk about growing and where our growers help each other out. This is an uncensored community and gives prospective customers a great idea of what they can expect with a Grobo. We have seen huge growth over the past year as we ship more and more systems.

how-we-launched-a-130k-month-automated-home-growing-box Our growth over the past year

Customer Support

One of our values at Grobo is to enchant our customers with every interaction. By publicly listing our phone number on the website, and being available and as transparent as possible with our customers we have seen lasting relationships built. That’s why many of our existing customers have now bought their 2nd or 3rd systems!

Referral Campaigns

We use ViralSweep to run a referral campaign once or twice a year. Every time we run this, we see 5,000+ entries with a ton of customers sharing Grobo with their friends. We give away a Grobo each time so the prize is substantial and worth sharing. These campaigns have helped us boost our website traffic, YouTube subscribers, Social Media subscribers & engagement and our newsletter.

One thing that hasn’t worked well for us is trying to hack the system and switch our focus often. You need to produce good content and really care about your customers and audience. Ads work for faster growth but they’re expensive and if you’re focused on optimizing your on-site conversion rate (which we used to be) before you’ve got 1,000+ visitors each day it’s just not worth it. Focus on what moves the needle.

how-we-launched-a-130k-month-automated-home-growing-box
Some of the data from our latest referral campaign.

Processes are key. Make a guide for everything you do, and then it’s easy to pass off to someone else as you work yourself out of a job.

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Bjorn Dawson, on starting Grobo ($250,000/month) full story ➜

Diversify Your Product Line

Adding new products to your business is a great way to expand into new markets and grow your business.

It's important to note that adding new products and diversifying may not be in the cards for you right this moment, and that's okay. You can always consider it down the road.

Here are some reasons you may want to considering adding/diversifying your product

  • Meeting the needs of your customers
  • Establish yourself as a top provider in your industry and stay ahead of the game with competition
  • Resistance to downturns/trends fading
  • Create new revenue streams

Resources

We put together the best resources on the internet to help you start your cannabis business.

Tools

Books

Web Resources

Videos

Case Studies

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