Starting a business is possible even at a shoestring budget. However, lower initial investment also leads to lower turnovers and profits. Most individuals would feel a need to scale once they have mastered the basics. Nevertheless, many people struggle with the issue, as they might have a successful business, but not at a scale they would like.
However, one should not be discouraged and remember that even companies like Google and Amazon started their journey from a garage.
Scaling your CBD Business for Success in the CBD Market
First, one needs to understand that growth and scaling are two very different terms in business language. Growth is when a person increases business revenues through a proportionate amount of investment—in contrast, scaling means looking for ways to expand the business without a considerable increase in investment.
Growth is not that bad as it helps get a more significant share of the market, boost brand value. However, as one can guess, scaling is the key to long-term success in any business.
Classical strategy to scaling is increasing the depth and width of business. It primarily involves expanding to new geographies or markets (e.g., within the country or internationally), expanding the product portfolio with a particular focus on brand extension as it helps save costs, and considering new ways of communicating with clients (expanding promotional strategy).
However, experts at Harvard business school recommend avoiding certain pitfalls like scaling too fast and too early, focusing on quantity and not quality, losing business focus, making all decisions, and being unable to delegate tasks.
Keeping Updated on the Changing CBD Laws & Regulations
One of the challenges for those looking to expand the business is the different CBD laws in various geographical locations, and more importantly, continually changing regulations.
The CBD market is a fast-growing market. However, it also means that it is not a mature market and lots of changes keep happening at a fast pace. Just take an example of the classification of CBD as novel food by the EU. For those not ready for this law, it created considerable problems.
Additionally, when it comes to promoting products, laws also differ. For example, promoting CBD for pets in the UK may get any company into trouble. Moreover, laws regarding health claims are very different in the EU from the UK and the US.
Even within the EU, laws may differ. It is vital to understand that some countries may ban certain CBD products on health concerns, even if those products were legally produced in the EU.
Just take the example of vaping. There is a growing concern regarding health risks associated with it—the EU commission is considering bringing CBD vapes under the tobacco regulation act.
Choosing the Right Supply Partners
When looking to scale a business, one needs to find a supply partner with expertise in various CBD business areas, from providing private labeling, CBD wholesale, dropshipping, etc.
Since, in the long term, the focus should be on quality, and only quantity will follow, one should look for a wholesale supplier with excellent expertise in producing various CBD products from isolate to distillate. For example, it could be a good idea to consider water-soluble CBD isolate and distillate. In addition, CBD wholesale companies should also be able to provide equipment for in-house production and provide tech know-how.
CBD eCommerce: Selling CBD Online
For those new to eCommerce, there could be numerous ways of selling their products online. Nonetheless, all the online selling ways can be divided into two groups:
Selling through eCommerce platforms. It is the most straightforward way of selling CBD products. Platforms like Amazon are global. But then every European nation has other local major players like Otto and Zalando in Germany. The good thing about these platforms is that they are like a huge mall, and clients regularly come to them. On the downside, they may not allow sales of CBD in some countries, and there may be hassles of account approval. Further, they may take a considerable commission from sales.
Dedicated CBD sales platform: It means creating a dedicated online store, like with the help of Shopify, WooCommerce, and so on. Here options are unlimited. These stores have certain upfront costs, but it is not very expensive to create an online store. The most significant benefit is that such stores are the property of the owner. Thus no one can ban them, ask for commissions. On the downside, it is like creating a shop in an isolated place, and no one knows about it. Thus, a need for substantial promotional investments. Like promoting a product via social media, google, Insta, Facebook, and so on. Promoting the store on some local channels in the country may be an economical option.
Product sourcing is another issue. There are multiple ways of product sourcing both for beginners and experienced players. It could be CBD dropshipping business with practically no need to hold stock, but it also means a lack of sufficient control over the supply chain. Or buying CBD wholesale from private labelers, and finally, setting your own production.
Advice on Expanding your CBD Product Portfolio
The CBD market is growing at a fast pace, with a CAGR of almost 30%. That is way higher than most industries. However, competition in CBD is also increasing fast. Nonetheless, CBD business opportunities are many.
Differentiation is the key to long-term success.
It is the basics of marketing. One should be able to differentiate the product from others. If it is just another CBD oil, that may be challenging to sell. Further, consumers must be able to understand that difference. There are many strategies for creating products that stand out.
Firstly, focus on value-added products. Days of simple CBD oil are long gone. Thus, develop a product with added health benefits. This doesn’t mean increasing the concentration of CBD. But creating a unique product by adding terpenes, essential oils, and other cannabinoids to CBD oil. Doing so may help to make a product that is especially good for specific health conditions like calming nerves, promoting sleep, improving skin health, anti-aging, preventing headaches, and much more.
Another good way to scale things could be focusing on a special user group. Thus, one may come up with CBD products specifically for sportspeople or active lifestyle, women health, topicals, cosmetics, veterinary products, to name a few. It would be a good idea to provide a range of products that focus on one of these segments, rather than trying to expand with single or some sub-quality products in all these segments.
Tips for financing the business
Doubts that banks or other financial institutions may not finance the CBD business are unfounded. Banks finance legal business activities or legal entities in any given nation. Thus, a legal entity may apply for a business loan based on the business plan and apply for a loan for equipment purchase or equipment lease.
Of course, there are also microlenders, and they are generally more flexible. However, the interest rate of such lenders tends to be higher.
Indeed, there are other flexible ways of finding investment, like offering the stake in your business to various lenders. These could be friends, venture investors, angel investors, and much more. The only thing to remember is that most investors, be it institutional or angel investors, will ultimately look at a business plan that is realistic, doable, and flawless.
The first step is always the hardest one. But don’t worry, Essentia Pura will help you kickstart your CBD business! Get in touch to find out more about programs we offer for upcoming businesses. Already an established CBD business and ready to grow with us? Just compile the web form on this page!