How to Survive as a Cannabis Small Business
Published on 1/11/21
As the cannabis industry continues to develop, state legalization increases and the demand for legal cannabis grows, major companies have been swooping in to take up the majority of markets and forcing smaller businesses out of the industry. As adamant supporters of local business, we believe that the cannabis industry is innately about the community. So were here to offer useful insight and tips for operating a successful business within this increasingly competitive industry.
A Cannabis Market Overview
While the cannabis industry may be relatively new, it is quickly gaining a lot of traction. Research and revenue forecasts predict that the US market size value will increase from $23 million in 2020 to nearly $74 million by 2027. Because of increasing marijuana legality, social acceptance and consumer demand in most markets, growing revenue drastically. These revenue forecasts are driving the industry forward, bringing tons of investors and entrepreneurs to the cannabis scene.
We can generally divide the cannabis industry into three primary branches: cannabis cultivation, production and dispensary. While local businesses operate within each of these three branches, larger companies are being built because of the growing demand for legal marijuana. As larger companies come in and streamline the logistical aspects of mass-produced marijuana, smaller companies are being pushed to compete for their livelihood. Big cannabis companies buy out smaller operations and continue to homogenize an industry defined by grassroots efforts and community support. While this isnt a problem unique to the cannabis industry (hello, gentrification) it is especially relevant because of how young cannabis markets are. Because of weeds promising future in America and the very nature of cannabis culture, small businesses can make changes necessary to keep cannabis a local, small-business industry.
Tips for Small Cannabis Business Success
There has been an increasing trend toward shopping locally, especially in the wake of COVID-19 and the push to support the local economy. As a small cannabis business, you can take advantage of this national swing toward shopping locally by using the following tips in creating a brand presence and store experience that separates you from the larger competition.
Understand Your Local Market
Small companies need to understand the local market, especially in industries like cannabis. Who are your primary customers? How big is your target audience? What does the competition look like (from both small and big businesses)? Once you understand the local landscape, you can make decisions based on who your customer is, what they need and how you can best provide them a rewarding experience.
Find Experienced Investors
Investors are especially useful if youre looking to start a cannabis business, but founded companies can also look toward investors for a financial boost. Finding an investor with cannabis experience can provide your business with extra money for growth and expansion, and it can also provide you with an invaluable resource for guidance and direction. The legal cannabis scene is still relatively young, but there are people within it that have the experience you can harness and utilize for your store.
Find Your Niche
Big businesses usually have a lot more resources to work with, but they also have a lot more territory to cover with a much broader audience. As a small business, you can thrive by homing in on a specific section of the market. Find your niche and perfect it. Choose a specific market segment to focus on and grow from. Especially in cannabis, a small business should always strive for quality over quantity.
Create and Utilize a Strong Marketing Strategy
Since cannabis businesses cant often market in traditional ways, small cannabis companies need to utilize everything available to execute a smart marketing strategy. Along with an elevated brand, the content you publish is critically important to growing and retaining your customer base. Utilize social media, post consistently and offer engaging content that gives consumers a reason to interact and invest in your brand. Conduct basic market research and build content and marketing strategies based on customer segmentation. Think outside the box, be creative, and put positive, educational and entertaining content out there that your consumers will remember.
Elevate Your Branding
To compete, local brands need to stand out. Branding should be clean, noticeable, professional and unique. From your logo and company name to your slogan and website design, a local cannabis company should have an intriguing aesthetic that draws people to the store. An identifiable cannabis brand can be the key to customer recognition, credibility, and a competitive edge. Build an accessible website, use verbiage that resonates with your local market and be precise about where you market yourself.
Deliver Excellent Customer Service
Customer service can be the defining factor in competing with larger businesses. By emphasizing friendly and helpful customer service, you can outpace larger corporations that dont have the same level of micro-control. Reports suggest that companies that improve their customer service see increased revenue of 84%, and the number one reason customers switch brands is due to poor customer service. By leveraging a community-centered staff, your cannabis company can make the customer experience highly personal and regionally tailored.
Create a Loyalty Program
Incentivize brand loyalty by creating a loyalty program. Your customers will come back if they know theyre working their way toward a reward. It shows your customers that you value their patronage and that youre willing to invest in people that invest in you. There are plenty of loyalty program styles you can implement, including tiered loyalty programs, perks programs and even gamified programs.
Get Involved In the Community
As a local business, you have the advantage of being able to sincerely focus on the community. Get involved and show your support. Involve your company in fundraising and volunteering. Build relationships with other local companies and be part of the communitys local business scene to make connections where you can. Involve yourself and employees in the social justice scene to support the customers that support you and be aware of the lives that your business effects. Not only is putting the community first an intrinsically good thing to do, but it will also go a long way in building trust for your brand and ensuring a loyal customer base.
Do you support local businesses? Are you part of a small company team? Comment below to let us know your best practices for competing against larger companies and staying ahead of the game!