Over the past few years, the U.S. CBD market has taken off. It’s a fast-growing industry, and there are tons of companies popping up to meet the growing demand of consumers.
CBD consumers have a lot to choose from. And they’re becoming increasingly aware of the different ways to spot quality products. So starting a CBD business of your own will require a good deal of thought and effort if you want to stand a chance of differentiating yourself from the crowd.
If you’ve been thinking about starting a CBD business, there are a few things you need to think about beforehand. In this article, we’ll explain the steps you need to take to start a successful CBD business.
5 Steps to Start a CBD Business
Starting any business is a big deal. There are so many factors to consider that it’s easy to get overwhelmed. These factors increase significantly when starting a business in a high-risk industry such as the legalized cannabis, CBD, and hemp industry in the U.S.
Follow these steps to get started on the right foot.
Create a Business Plan
All successful businesses begin with an eloquent, comprehensive, and clear business plan. This step will take a long time. It should involve hours of thoughtful research, critical thinking about your place in the market, budgeting, and competitor analysis.
Here are a few things your business plan should address:
- Your niche
- Your audience/ideal consumer
- Your products
- The laws and regulations that will apply to your business
- A competitor analysis
- A budget
- Market research
- Eligibility for licenses and registrations
- Eligibility for DE&I and other grant or access programs
- A list of suppliers
- Plan to access capital
- Proof of capital
- Banking, card processing, and insurance plans
Your business plan will — and should be — a living, changing document that evolves as your understanding of your business does.
Don’t be surprised if you need to revisit and adjust plans as new information presents itself. It’s a normal part of the planning process and every change you make will get you one step closer to a solid final draft.
2. Find a Location
This is often one of the first roadblocks business owners face when starting a CBD business. You’ll need to find a physical location from which to run your business, whether that be a warehouse, storefront, or other commercial space. The hard part: it needs to be compliant with the regulations in your area.
Many states and municipalities have rules about where businesses in high-risk industries can operate. If you’re working with a real estate agent, they can navigate a lot of this for you, especially if you find a professional experienced in the CBD industry.
3. Secure Capital
If finding a location is the first obstacle many CBD entrepreneurs face when trying to start a CBD business, then seeking capital is the biggest. CBD financing is one of the most difficult parts of operating a business in the CBD, hemp, and cannabis industry. Especially at the beginning.
Currently, it’s extremely difficult for most CBD businesses to access funding through a traditional bank loan. So, you’ll have to consider other options.
Think about fundraising in the following ways:
- Investments from friends and family
- Crowdfunding platforms like Kickstarter or Indiegogo
- Private lenders and investors
Although difficult, securing funding is critical when starting a business. Once you complete this step, you’re well on your way to reaching your goals.
4. Apply for a CBD Business License
Although you might only need the majority of your capital after you receive a business license, you will need to pay quite a bit in licensing and application fees during this step.
The business license costs and process vary by state, but many states provide accessible online portals for business owners to submit their documentation and information.
5. Source Staff, Products, and Materials
What exactly you do in this step will depend on the nature of your business. Retailers and merchants will begin sourcing suppliers, whereas manufacturers will look for distributors.
If you’re an online business, this process should involve planning out your delivery methods. A brick-and-mortar location such as a dispensary, on the other hand, will need to find products to sell.
During this step, you should also begin hiring the employees you need to operate your business on opening day.
6. Start Marketing Your CBD Business
Finally, it’s time to introduce your CBD business to the world. This step can be completed alongside some of the others on this list, but you should try to aim for at least a few months of brand-awareness campaigns before opening day.
Your first step should be to invest in a solid website so that your audience can find you when they look for you or your competitors online.
Key Challenges When Figuring Out How to Start a CBD Business
Some of the most difficult challenges of starting a CBD business involve banking and financing.
Here are some things to consider:
- Banking: the regulatory landscape is changing constantly, but this is one of the most complicated parts of operating a CBD business. Emerging technology like Qredible was designed to help businesses with this.
- Insurance: this is another challenge that new technology is helping CBD businesses and insurance providers overcome.
- Payment processing: CBD vendors might face higher fees and volatile relationships with their card processors if they aren’t up-to-date with the latest compliance software and monitoring tools.
Start a CBD Business the Right Way With Qredible®
Starting a CBD business is not a simple process, but Qredible® can help.
When it comes to merchant processors, investors, banks, insurance companies, and other necessary financial services, the most important thing you can earn is trust. Positive relationships with these service providers are essential to the well-being of your business, so you can’t afford to take chances.
Qredible provides CBD businesses with an industry-disrupting technology that validates and secures documents, licenses, COAs, and certificates. This lessens the need for risk analysts and other costly legal professionals while increasing trust across the entire supply chain.
In short: Qredible helps to establish your brand as an industry leader.
Set up a discovery call today to learn more about our resources designed to build a loyal customer base, stock quality products, and even secure funding from financial institutions. Our team would love to learn more about how we can support you.