The act of starting a business can be complicated enough without the worry of delving into a niche field. The cannabis industry is vastly different from many others out there. All thanks to the level of hoops and regulations that an entrepreneur must deal with.
Throw in common misconceptions about the industry itself, and suddenly the process feels more intricate, intimidating, and sensitive. Yet none of that should discourage new businesses – it just means they need to do their research ahead of time, such as looking up the most common mistakes in the industry and how to avoid them.
Mistake #1: Rushing To Open
The biggest mistake for any business is rushing to open a business. This in itself can lead to failure, regardless of the industry involved. It’s especially fatal for those in the cannabis industry, as there are so many laws and regulations that must be researched.
Furthermore, it is essential to take the time to research the business’ potential demographics. Is this area a potentially promising area for clientele? Is there a market for it? These are questions that must be considered and then answered early on.
Mistake #2: Picking the Wrong Location
On a related note to mistake number one, location is everything. Failing to pick the right property can take down any business. It’s the harsh truth. When it comes to choosing a location, the owners must consider the potential clients and the property itself. Is this area zoned for the type of business intended?
This process is made more complicated by the nature of the industry. A Conditional Use Permit must be obtained for those in the cannabis industry. Additionally, the business may face resistance from the community itself, and thus it is crucial to test the waters before any investment is made.
Mistake #3: A Lack of Business Plans
All businesses need plans, but this is especially true for those in the cannabis industry. There are three types of business plans for the industry: Regulatory-based, Investment-based, and Operations-based.
Contrary to popular belief, all three are required for a business. The first type will be turned in to state officials, the second focuses on finances/marketing, and the last is essential for the day-to-day operations.
Mistake #4: Not Knowing the Terminology
When it comes to a niche business, those involved in the project must understand the industry itself. Owners and managers have to exhibit more than a basic understanding of what they are hoping to sell – especially in a field as sensitive as marijuana.
Thus, it is essential to know the terminology for running a cannabis business. Understand the differences between recreational or medical, what licenses are called where, and every other potential detail available.