Are you looking to take advantage of the booming legal cannabis market and start your own business? The prospect can seem highly attractive, particularly as countries around the world continue to relax the legislation surrounding marijuana. This relaxation is causing markets worldwide to flourish, and here in Europe, experts are predicting that by 2025, the legal cannabis market could be worth an incredible €3.2 billion.
With such vast potential, many budding entrepreneurs are seeking for a way to capitalize on the many benefits that the industry can bring. However, although there is undoubtedly huge opportunity within the legal marijuana industry, the path to success is not easy, and there is a wide array of legislation, laws, and taxes that you need to be aware of.
Not only that, but there is also incredible competition. With such an attractive prospect, many innovators are looking to move into the industry, which means in order to thrive, you need to ensure that you have a truly unique and captivating product or service.
Steps to starting your marijuana business
Starting a cannabis-related business is no different from starting any other company, and you will need to have a thorough understanding of the current industry landscape, earning potentials, risks, competition, and much more. The cannabis industry is still relatively young in comparison to any other business sector, so alongside the massive potential for profit, there are also a huge array of unknowns that could set you back.
However, with the right support and decisions, it can be incredibly lucrative, so if you are looking to start a business within the marijuana industry, here are some steps to success.
Step one – Decide on your business
This is probably the most important step on your way to success. There are thousands of businesses in operation already within the marijuana industry, so it is crucial that you know what sector of the industry you want to operate in.
Do you want to grow it? Open a coffee shop? Sell accessories? Produce rolling papers and cones? Whatever it might be, you need to focus solely on what it is you want to do and achieve, as, without this, it will be impossible to progress.
It is also crucial that you understand not only what the current laws and requirements for that particular sector are currently but any potential amendments that might be coming into play. There is no point in starting a business if things are going to rapidly change and leave you either breaking the law, obsolete, or having to change your entire strategy.
If you are unsure of the potential steps to take, then you should speak to current businesses doing similar things to what you would like to do. Although they will likely become competitors, they will know the difficulties in establishing a cannabis business, and many will be happy to help.
Step two – write a business plan
Once you have decided on what exactly it is that you want to do within the cannabis industry, then your next step is to write your business plan. Given the strict monitoring and laws surrounding the production, sale, and distribution of marijuana, this will need to be very in-depth, particularly in comparison to starting any other business.
You will need to be aware of the exact laws that relate to the country and region you are not only based in but hope to work in too. You will also need to think about:
- the suppliers and partners that you want to use
- The costs involved in setting up a business
- When you would expect to start to turn a profit
- How you will market your brand and attract customers
- Your unique selling points
- Who your competitors are
- Whether you would require external help (from accountants and lawyers etc.)
The more in-depth your business plan is, the higher your chances of success will be. However, it is not a rigid document, and as laws change and your company grows, you might find that you need to keep this updated to reflect your current scenario.
Step three – register your business name and secure your permits
With that killer business idea and an in-depth plan written, your next step will need to be registering your business with the proper authorities and ensuring that you have secured the relevant permits. Choosing the right business entity, whether it be an LLC or a corporation, is essential in ensuring you are accepting the level of risk you are willing to take on.
When it comes to ensuring that you have the relevant permits and licenses, you will need to ensure that you do your research. Failure to secure the right licenses can see your business end before it has even begun, so if you are unsure of what exactly you need, liaise with an experienced legal entity.
Step four – source funding
Every new business will require a cash injection in order to grow and expand, which is why it is essential that you source relevant funding. Depending on the sector of the cannabis industry you are looking to move into, you might need to purchase vast amounts of products or expensive equipment.
You might be able to afford these yourself, but if not, there are many lenders out there looking to invest in a growing business. With the legal marijuana industry booming, it is a highly attractive proposition for potential investors, but in order to attract the best funding sources possible, you will need to ensure your business plan is as thorough as possible and you can help to showcase the potential success of your brand. Top tips for ensuring your cannabis startup is a success
While these four steps are a crucial part of starting a cannabis business, the success of any brand relies on hard work, dedication, and luck. However, there are some tips to remember to keep in mind to help you on the path to success.
- Make it unique
One of the most important tips for those entrepreneurs looking to make a success of the business is to ensure that their idea is truly unique. Simply taking an already popular idea is often not enough to succeed, and you will need to ensure that you are working on something compelling that stands out from the crowd.
This does not always mean that you need to think of something completely new, but it does mean you need to build on something already available and make it even better. Being able to offer your customers something that they not only want, but need, will help ensure that you are able to secure your place in this highly competitive market.
- Understand your consumers
One of the biggest mistakes that many entrepreneurs and new cannabis startups make is not understanding who their consumer base is. When you do not know who it is who will be buying your products or using your services, you will not be able to ensure that you are truly meeting their needs and requirements.
This will lead to them quickly seeking a competitor who does meet those desires, seeing your market share decrease rapidly. That is why the key to success for any budding cannabis business is to undertake thorough research on your market, your consumers, and your competitors. With this information, you will be able better understand what it is that you need to be doing to stand out from the crowd and offer an unrivaled service.
- Know your product
Alongside understanding your consumers, it is crucial that you truly know and understand your products. Customers want to purchase from and use the very best products and services possible, and when it is clear that a company does not quite understand what it is they are selling, many will be tempted to seek a competitor.
The cannabis industry is a passion industry, and the vast majority of consumers are highly knowledgeable, so you want to ensure you know your product inside out. By demonstrating that passion to your customers, they will see your knowledge and interest and be far more willing to utilize your brand for their needs.
- Build relationships
Any business relies on partnerships and relationships, so from the very start, make sure you are being as open and as friendly as possible with partners and customers. A friendly approach will make suppliers want to work with you, while customers are more likely to return to a company that they had a great experience with. In fact, research has shown that it costs five times as much to attract new customers as it does to retain one, while just a 5% increase in retention can boost profits by up to 95%!
Of course, the key to success is not just about building relationships with customers. You want to ensure that you are working with the very best partners possible. Whether it is your website developer, accountant, or social media manager, focusing on building strong relationships will ensure everyone is working as a team and striving for the same goal.
- Stick to the rules
The legal cannabis industry can be an incredibly complex one, so it is crucial that your business will need to be following the current laws and legislation in your regions if you want to thrive and succeed.
If you do not play by the relevant rules, you could face sanctions, be forced to close, or even in the worst-case, face criminal proceedings. So make sure that you are always aware of what you can and cannot do, and remember that it is your responsibility to be up to date with the latest changes in the law.
- Focus on raising capital
Many startups fail simply because they did not secure enough capital to get their business off the ground. Securing investment capital will ensure you are able to ride out the inevitable bumps in the road that will come from starting a business. At the same time, it will also ensure that you can reinvest in the business as you grow, helping you to expand into bigger premises and better equipment.
The cannabis industry is booming at the moment, and there has never been a better time to enter the market. However, in order to succeed in this highly competitive industry, you need to ensure that you are doing everything you can to stand out from the crowd.
The best advice for any startup is to pre-plan everything, triple-check everything, and be prepared for the unexpected. Far too many entrepreneurs jump in head first, only to find out that a few months after opening, they are having to shut up shop.
It can be very exciting to enter a rapidly growing market, but you need to focus on ensuring you truly understand your market and products. Here at Eurocones, we know how tough it can be to start a cannabis business. Over the last few years, our young and innovative team has strived to provide our customers with the most cutting-edge solutions possible.
From our industry-leading pre-rolled cones to our popular accessories, we have worked hard to give our clients the very best products. We also offer a wide range of commercial products that could help you to take your budding cannabis industry to the next level. Want to find out more? Get in touch with our team today!