Opening a dispensary seems like a no brainer, can’t lose proposition. You might want to think again about that.
While cannabis is becoming more mainstream and the laws are starting to slowly bend towards complete legalization, the industry is booming. Unfortunately for you, there are many players jumping aboard the green rush and opening dispensaries.
In 2015, your business was likely to be profitable in the first year. That’s what happened to 70% of marijuana businesses. By 2017, it was 55% of businesses.
While you have a great chance at being profitable in the first couple of years, you’re going to have to do a lot more work to make it happen.
Read on for 9 tips to make sure your new dispensary is profitable and successful.
1. Write a Business Plan
The place where you need to start if you’re thinking about opening a dispensary.
You’re going to need a long and formal business plan. A business plan on a napkin isn’t going to cut it. The business plan will be necessary to get funding and licensed in a lot of places.
You need to show people that you’re capable of running a business, you have it well thought out, and you can make it profitable.
Be sure you include what your business is about, target market, competition, how you will market the business as well as projected sales, startup and operating expenses.
With your operating expenses, you’ll need to know how much it really costs to open a dispensary. Read this article for more information about that.
2. Choose a Great Location
Where will you open your dispensary? You’re going to want to open it in a place where there’s ample parking or is walkable for people.
The location also needs to be within budget. You can get a decent space for less money in an up and coming location, fix it up, and attract new customers there.
3. Have a Good Team of Advisors
You probably know a lot about weed, but not that much about business. Do you know how to get licensed or pay business taxes?
For that reason alone, you’ll need to have people around you who can help guide you. A business attorney, tax attorney, and accountant are absolutely necessary.
You may need to use an HR consultant as you hire staff to make sure that you’re in line with all labor laws.
4. Create a Strong Brand
Your dispensary will be opening in a crowded market. How will your dispensary be better than all of the other dispensaries out there?
You’re going to need to explain that to potential customers. Customers aren’t going to sit around and listen, but if you can quickly connect with them on an emotional level, you’re taking small steps to create loyal customers.
Your brand needs a visual to go along with it. This needs to convey everything that your dispensary is about. You have about 10 seconds for that visual to make an impact and you need to get it right.
5. Design a Customer Experience
When people first come to your dispensary, will they want to come back? You think that the answer is yes, but have you given them a reason to?
Your job is to create an entire experience for your customers that will make them want to return over and over again.
Think about how you want a potential customer to feel from the first time they see your brand all the way through to hanging out at your dispensary.
There needs to be a positive experience at each step. One negative experience can lead to a lost customer.
6. Use Smart Marketing Tactics
When you open your dispensary, how will you get people in the door?
There are dozens of ways to answer that question. The answer lies in how much can you spend and how long can you wait to build momentum?
If you want great short-term results, invest in PPC ads. They could be costly, but they can be great for getting people in the door right away.
The other thing to do is to invest in long term strategies, such as social media or SEO. These are more sustainable in the long term, but they need time to develop.
7. Hire and Train Employees
You’re going to need to hire employees at some point in your journey of opening a dispensary. You won’t be able to do everything on your own.
You’ll want to make sure that your staff are friendly, knowledgeable about products and strains, and can deliver the customer experience you envisioned.
8. Look at Financing Options
As you probably figured out by now, it’s not cheap to open up a dispensary. There are licensing fees, location costs for starters.
Then you need to hire staff, market the dispensary, pay for office equipment. Then there’s the inventory. Before you know it, you could be $100,000 in the hole before you open your doors.
Unless you have that kind of money lying around, you’re going to need to find outside investment. That could be in the form of crowdfunding, loans, personal loans, or investment capital.
9. Always Track Results and Revise
You have a plan and the ambition to execute it. Now you need to make sure you’re on top of things with your plan. You’re going to need to track your sales and marketing tactics.
Ask customers how they find you. If you find that one marketing method is working very well, invest more resources in that. If you find that something isn’t generating results, ditch it.
Opening a Dispensary Takes Guts
If you plan to start a new business, opening a dispensary is a smart choice. While it takes a little longer to be profitable, you’re still better off than most businesses.
The main things to remember about opening a dispensary are that you have to treat is like a business. Just because you want to share your love of weed with the world doesn’t mean success.
You need a formal business plan, get the proper licenses, get your staff and marketing in order. These are things that people often miss, but if you don’t you can have a very successful business.
Want to know more about the marijuana industry? Check out how you can open a dispensary in Nevada.