The CBD industry is projected to hit $21.4 billion by the end of 2020. Even better, the price of CBD biomass has dropped exponentially. While that might sound alarming, sales haven’t gone down. So, now you can invest in hemp extract or high quality CBD flower and sell the products at an affordable price.
Plus, in the wake of COVID-19, the demand for natural and organic products has increased. That means now is the best time to get into the CBD industry! First, consider these ten things before starting a CBD business.
- Decide Which Type of CBD Business You Want to Be
Before an entrepreneur jumps into starting any business, they should have a well-thought-out plan. A lot of time, labor, and resources are going into this endeavor before you even sell your first product. So, be sure to think about all the logistics before you start making deals and transactions.
First, decide what type of business you’re looking to start. The CBD industry has an ever-growing list of business opportunities for you to explore.
Some options to consider include:
- Online store only
- Brick-and-mortar store only
- Both online and brick-and-mortar stores
- Online store and farmer’s markets
- Sales through affiliates/practitioners/reps
- White label sales or third-party seller for other brands
The beauty in starting a business is that you can tailor your operations to your needs. If you’re starting a fun side business with your family, maybe an online store and farmer’s markets are all you need. For those looking to conquer the world, you might want to consider ALL of these options.
- Uncover and Fund Upfront Costs
Nobody wakes up one day, wiggles their nose, and poof! They have everything they need to start a CBD business. There are a lot of upfront costs.
You need to see if you have the liquid assets necessary to start this journey. Otherwise, you may have to consider investors or a loan.
Expenses for starting a CBD business include:
- Sourcing the hemp (paying farmers or buying the hemp yourself)
- Buying lab equipment or paying a third party
- Insurances and applications to run a CBD business
- CBD merchant account application
- Web hosting, website themes, and graphic designs for online presence
- Costs of creating an entity (LLC, Corporation, etc.)
Again, which type of CBD business you run will determine upfront costs. To have a brick-and-mortar presence, you’ll have to take into account rent, taxes, and other fees. Whereas, online stores must consider shipping and packaging costs.
- Get Your Paperwork in Order
Starting any business requires a lot of people. CBD businesses need even more. With cannabis still federally illegal, you want to make sure all of your paperwork is in order for your LLC.
Paperwork considerations include:
- Registering for taxes
- Opening a company bank account
- Getting a company credit card
- Federal and state licenses
- Certificate of occupancy
A lot can fall through the cracks. Consider hiring a legal team that is apt in federal and local cannabis laws.
- Create a Name and Logo
Your name and logo create your brand identity. It’s essential they’re just right. Start with the name first.
Make sure there aren’t any copyrights and that nobody owns the web domain or social media handles. In fact, we had to pay somebody a fee to procure the Joy Organics name before launch!
From there, create a logo that captures your identity. You want people to see the label and KNOW these are YOUR products.
- Find the Right People for Your Team
Successful people surround themselves with smarter people. You’re running a CBD business. Don’t be the social media manager, front store clerk, and blog writer!
Put people in the right places so that your business succeeds. If this is a small family business, discuss which role best suits each member.
Otherwise, put an ad out on Glassdoor or Indeed. Specify exactly what you want in an employee and your goals for the positions you’re attempting to fill.
- Make Sure You Are Legally Up-to-Date
While you’re putting people into positions to worry about things like the law, a business owner shouldn’t be naive. It’s your tail that’s on the line!
Make sure you are up-to-date with all local and federal laws. This knowledge is especially crucial if you have an online presence. Also, be aware of the regulations in each individual country in which you decide to conduct business.
- Find Your Demographic
Figuring out your demographic is the last major step in the first phase of starting a CBD business. You need to know who is buying your products.
Determining your demographic will help you figure out things like packaging design, where to market your items, and which products to buy in the first place.
- Determine the Products
Now that you know who you’re selling to, put yourself in their shoes. Jot down some products you would imagine them using. Then, go find them!
If you’re working with manufacturers to make new items, figure out which type of CBD products they will be. Are you looking to sell edibles, cosmetics, or softgels? Discuss with your investors what your customer is looking for in these items and which ingredients you’d like to see included in the formula.
For those selling other brands or joining a white-label service, test their products first. Make sure all of the items are third-party lab tested and use only natural ingredients.
- Use Marketing Strategies and Techniques
Once you have your brand identity and products squared away, it’s time to spread the word. The most effective way of achieving this is by increasing your online presence through marketing.
Start a blog that drives web traffic to your page. That will help your business stand out on Google. Be sure to write articles in line with your demographic and implement key search engine optimized (SEO) keywords.
Also, get out there on social media. Start liking and commenting on posts in the health and wellness sector under your brand’s account. Create engaging, shareable content. Word of mouth is essential for success.
- Figure Out Your Long-Term Goals
You’ll never get to where you want to go if you don’t know where you’re going in the first place. What’s the point of starting a business without any long-term goals?
Don’t be basic with your answers. “I want to turn a profit” will not suffice. Dig deep.
Do you want to become the #1 full spectrum CBD oil company in five years? Perhaps you envision your brand helping with the cannabis legalization movement?
There are no dreams too big or too small. You just need to recognize them first!