If you’ve been in the cannabis business for a while, you know that boosting your company’s financial success is an ever-changing process. There continue to be several challenges facing the cannabis industry you should consider as you work to increase profits.
For example, one consideration to keep in mind is the ever-changing legal market for cannabis in the United States. As of 2022, only 19 of 50 states have legalized marijuana for recreational use, despite most Americans supporting legal marijuana usage for recreational and medical purposes. Other considerations include banking restrictions and growing demand.
Whether you’ve been long invested in a cannabis business or only recently started one, think about where you may best grow your business. What states support marijuana use and offer better interest rates? Though many challenges exist, your cannabis business’s financial success is possible.
There are several ways to increase your company’s cannabis sales, from boosting your social media presence to paying better attention to state legislation. Through a combination of many efforts, you can make your company’s presence known and improve your profits. Here are 13 ways to boost your marijuana business’s financial success.
Operational costs are one of the first things you should asses when looking to increase your profits. Finding ways to reduce and adjust these costs can help you focus more finances on aspects of the business that will benefit you over time. While expenses like rent and utilities will likely stay the same, you can review your sales information and POS system to track your various products.
Paying attention to your inventory will help you find areas where you can eliminate products that aren’t selling as well. This will free up more money to invest in products that are popular among your customers. A POS system can help you manage your cannabis inventory and provide accurate reviews while decreasing operational costs.
Inventory stockout is a common way that cannabis companies lose out on consistent revenue. Keep an eye on products that may soon go out of stock and prepare for a restock by ordering more products or stocking shelves consistently. Running out of products can often be a missed opportunity to draw in new customers and prevent regular customers from returning to your business.
To prepare for inventory stockout, review your sales data regularly to determine which products may soon sell out. This will ensure you’re prepared to place new orders and keep up with customer demands. If you’ve already experienced an inventory stockout or feel you’re about to, try limiting customer purchase amounts or upselling tactics until you’ve restocked.
Producing an attractive inventory is another great way to access a large customer base and introduce them to cannabis. As more and more people have medical or recreational marijuana allowances, you can expand your business to more customers by offering various unique products.
Start by addressing your customer’s needs and wants. For example, consider showcasing a new stock of edibles that may appeal to young adults or consumers exploring cannabis for the first time. New products can entice customers and encourage them to return for more items.
If you’re wondering how to create attractive products, start by considering your brand and making a plan of what you want your products to look like. Tie in your product designs with quality logos and materials. To increase brand recognition, encourage repeat purchases through products that provide a positive experience for every customer. Consistency ensures your customers will keep coming back for more.
Due to the volatility of the cannabis industry, creating a contingency plan may help you prepare for unforeseen situations. The price per pound of cannabis may drop suddenly, or banking limitations may reduce your access to capital. Whatever the scenario, it’s essential to be prepared with a set outline and step-by-step plan to help you overcome obstacles.
Consult experts who can guide you through the industry and give you much-needed advice. Whether a financial advisor or a tax consultant, find someone you trust to help you map out the best contingency plan you can. With a solid dispensary financial plan in hand, you and your employees will know exactly what steps to take to point the business toward success.
Create a business environment that practices good communication. One aspect of your company you’ll want to communicate is your purchasing decisions, as officials will want to review a paper trail to ensure you’re handling your products correctly. Have several employees responsible for transitional tasks such as time logging, approval for purchases, cash handling and signatures to ensure your operational procedures are successful.
Often, a website or social media account is one of the first ways customers find a company or reach out for more information. A crucial step to increasing your revenue may be to ensure your website is up to date and appeals to a large customer base. As of 2021, over 4 billion people worldwide use social media, making it a necessity to cultivate an effective online presence for your business.
Start by planning a social media strategy that connects with your target demographic and typical customer base. Try to make the interactions between you and your customers a positive experience by making the purchasing journey interactive. Connect with consumers through videos, website content like blogs or web posts and email updates. Be sure to utilize as many platforms as possible to capture the most attention.
A great approach to social media for the cannabis industry is to keep your content both sales-focused and information-based. While you should promote your products, you could also create informative graphics, Q&As, polls and other content that keeps customers in the know about the industry’s latest trends and regulations. As a result, people can share your posts and spread the word about your business for you.
Customers appreciate speedy delivery and pickup services. If you can offer people a way to easily receive or pick up their favorite cannabis products, you’ll likely see an increase in sales. These services eliminate the time people need to spend physically browsing all of the items in your store, allowing them to fill up their carts from the comfort of their homes.
To boost sales, you can offer a discount code for people who choose to order pickup items. Beforehand, remember to train your employees to properly set up pickup orders in a designated location in your shop. This way, customers can simply walk in, grab their orders and be on their way. Make sure you research local regulations about delivering cannabis products before you start the process and partner with a reliable delivery service that can handle many orders.
Pay attention to how often your customers buy certain products. Retaining customers is vital to increasing your profits, so including deals like promotions and loyalty programs may help you grow customer trust and build lasting relationships.
Review your POS data to find customers’ shopping histories and what might incentivize them to return to your store. Elevate the customer experience by learning what specific products customers enjoy and offering them more often. Personalized recommendations through emails or in-person show you and your company genuinely care about your consumers and want to help them with excellent products that fit their needs.
Whether you currently rely on accounting software to scale operations or you’re looking to track data through an updated application, using programs like spreadsheets or seed-to-sale programs can help you store information to use at a later date. Further, you can streamline your work environment and reduce human error through automated processes that can calculate for you.
Upselling is one of the best ways to increase your cannabis business’s revenue. Many dispensaries create various products besides cannabis to sell along with their regular items. These items may include items like rolling papers, grinders, merchandise, food items, vapes or pipes. By offering complementary items your patrons might need to use your main products, they’ll be more willing to add those products to their purchases.
Consider offering gift cards or special deals for new or returning customers. For example, you might offer a punch card that qualifies someone for a free edible after 10 purchases. People love shopping at stores that offer good deals or enticing discounts, especially as a reward for their loyalty.
Another great way to increase revenue is to surround yourself with industry experts and professional employees.
Hire a CPA to help you maximize your taxes and ensure you follow your state’s laws and regulations. A great team will help you cultivate good business practices and save time and money while avoiding mistakes you could overlook. Fill out necessary financial, marketing and valuation roles with experienced employees who can help you build a long-term vision and a planned strategy for success.
When hiring a CPA or a financial advisor, look for people who will help you navigate the challenging world of cannabis while saving you money and time you can further devote to your company.
Explore your customer base to determine your niche market — find an angle yet to be explored and start offering products by thinking outside the box. However, ensure you don’t fall into the trap of offering products that are too niche. This may make your customer base smaller and end up decreasing your revenue, which won’t help your business in the long run.
If you’re unsure where to begin, it might help to survey your customers and ask them what they want to see in your shop the most. This strategy is a helpful way to find out exactly what your patrons need and build a better rapport with them in the process. It may take some time and testing before you locate a niche product that sticks, but the effort will be worth it when you’re one of the only cannabis businesses offering that product.
A crucial step to increasing your profits is understanding your state’s regulations. In some areas, marijuana is still illegal, according to federal or state laws, even for medical usage. Additionally, though CBD is legal in some form in all 50 states, a few states have tight restrictions around what qualifies as legal CBD, so you must also be aware of the CBD regulations where your business operates.
To stay on top of the laws in your state, follow the rules Federal Drug Administration’s (FDA) rules and stay updated on the Farm Bill, which has allowed CBD products to become more readily available to consumers. The FDA has many regulations on unauthorized products, which may affect your business if you’re found to be selling them.
Another factor to consider is social media. Many platforms don’t allow you to promote cannabis products, so ensure you follow the terms of service of the websites you use to avoid a violation. Make sure your marketing plans don’t claim to cure or prevent medical ailments, either. Hiring a lawyer who’s experienced with cannabis business law can be a beneficial investment.
At Polston Tax Resolution and Accounting, we understand that many cannabis businesses constantly look for opportunities to grow while navigating the challenges of state and federal regulations. Our company works with the cannabis industry to comply with laws and IRS tax codes. Our company works with new startups, growers, dispensaries and retailers to find reliable accounting solutions that fit your needs.
Aside from cannabis tax services, we offer various benefits for any client that owes taxes. Our company is a full-service tax and accounting firm that provides resolutions in compromise, penalty abatements, installment agreements, levy releases and revenue assistance. Whether you need accounting help in tax planning or preparation, bookkeeping or small business tax assistance, we’re prepared with over 100 attorneys, CPAs, accountants and more who can help you find a customized strategy to fit your business model.
Contact Polston Tax today to speak to a representative.