Recession Proof Your Cannabis Business
A lot remains to be seen as 2020 continues to unfold but uncertainty seems to be the theme so far this year. While cannabis businesses being deemed essential was a big win, the state of the economy still seems fragile as we look forward at getting individuals back to work and keeping businesses running.
Here are ten opportunities to look at your cannabis business to build towards a stronger tomorrow.
1. Assess essential costs – The biggest expenses in most businesses are occupancy costs and staff. Assess whether or not your business is in the right location, or if you are in the position to ask your landlord to renegotiate a rent agreement. Cannabis businesses were unfortunately excluded from many of the government aid programs such as payroll protection loans to support their staff, however you may be eligible for advance payroll tax credits. Make sure you contact a cannabis accountant to discuss this. Look at other areas you might be able to cut back as well, marketing and advertising usually isn’t the best choice, but analyze which campaigns are working for you right now. What other operating expenses do you have that might make a difference in your bottom line if you cut back?
2. Prepare for delays especially with state regulation - states are cutting staff and significantly behind in most administrative processes right now. Don’t rely on new licensing and regulations to be pushed through any time soon. You may need to make adjustments in your business for the timeline of these.
3. Consider accelerating your accessibility – how can you make it easier for customers to reach you? This may mean adjusting your hours, updating your website for easy communication, or looking at shipping and delivery terms. Accessibility is key with so many people limiting their exposure outside their homes and with strict retail guidelines.
4. Consider partnerships – this doesn’t necessarily mean your competitors…are their businesses who offer complimentary products to yours? Combining with a partner to give both your product offerings a boost for your customers gives you the opportunity to cross advertise to both your books of business while improving the products available to your customers.
5. Manage your workforce – the changing landscape of your business may mean that you need to reallocate staff hours. Consider where you may be able to retrain staff to utilize them in areas that they may not have been working in before. Staff development is an important investment when it comes to keeping your business innovative and efficient.
6. Don’t cut your marketing – see step one! Often times you can ask for price breaks from vendors and find other ways to save, but accessibility and visibility are both important for long term growth. With marketing already a challenge in the cannabis industry make sure you’re looking at all your grassroots opportunities to reach customers. This strategy often requires more of a time investment than anything else so plan accordingly (see retraining your staff).
7. Renegotiate bills and contracts – it can’t hurt to ask! I call our cable service provider pretty much every year and ask for the costs to be reviewed. If they offering the service at a lower rate to new customers why can’t loyal customers benefit from the same rate? I always get it reduced. Don’t be afraid to call vendors and ask to renegotiate contracts. Often times a renegotiation that saves the business for them is worth it!
8. Leverage bulk buys and discounts – this can be time consuming too but if couponing your groceries saved you $50 a week that adds up to $2,600 a year! Look at what supplies and materials you’re using the most of and then research where you can get the best deals. Make sure you take into consideration the shelf life of the products you’re buying compared to how quickly you turn them over.
9. Manage inventory – this is critical for every cannabis business no matter what, but even more so in a season of uncertainty. Managing your inventory well will help to reduce waste, spoilage and theft. If you don’t have your internal controls set in place for strong inventory management now is the time! Make sure you’re doing physical counts and your working with an inventory management system that fits your business size.
10. Innovate – innovation is creating a better normal. Pivot now and thrive later! Give your business an honest overview and challenge assumptions that you may have. Just because something has worked in the past doesn’t mean it will work in the future. Look for ways you can better serve the community you are located in. How can you expand your accessibility without expanding your physical space? Consider asking your customers for feedback on how you can better serve them.
To learn more about how we can help your business to implement the above strategies call us at 603-948-6845 for a free 30 min consultation.