Analysis of a report by the Hemp Journal reveals that the CBD industry is expected to grow to a whopping $2.1 billion in consumer sales by 2020 – which is a 700% increase from 2016.
If you are interested in staring a CBD business, now is the time. With thousands of CBD products coming onto the market, and new brands popping up everywhere, there is no time to lose.
But, before you jump into action, you need to make sure that you go about setting up your CBD-centric business in the right way. The CBD market is new, and as such there are a number of potential pitfalls awaiting the unsuspecting entrepreneur.
And besides this aspect – starting any business can be tricky and risky!
Fortunately, there are some steps and formulas for success that you can use to propel your CBD venture. Eight to be exact.
Wanna know what these are? Read on.
1. Get familiar with the regulations
When it comes to setting up a business to sell CBD products, the first and most important thing to get clued up on is the regulations surrounding the sale of CBD.
According to the fed, it is fully legal to sell products containing CBD, but only if the CBD is extracted from hemp plants. CBD extracted from cannabis plants is illegal in states where cannabis has not been legalized.
Additionally, CBD products, coming from hemp, also need to have a THC count of less than 0.3%. Anything above this is also illegal.
Also, any CBD product that is marketed to specifically treat physical ailments is required to go through a regulatory and approval process by the FDA. To date, only one CBD product has managed to gain FDA approval.
The takeaway from this is that unless you are willing to undergo the lengthy (and likely unfruitful) approval process with the FDA, instead you are best off being label smart. To avoid violating federal law, it is wisest to label the benefits of your products in non-specific and general terms. For example, instead of stating that “This product can be used to treat anxiety,” rather say something like “enhances wellness,” or “promotes calm.”
If you are particularly excited about the potential benefits of CBD and your products, this can be a bit of a bummer. But! What you can do to convey the benefits and info that you are pumped about is to include links to articles or supply printed fliers that are not product specific, but instead contain information relating to CBD in and of itself.
Lastly, you also need to check your state laws and keep up with any changes in these so that you can abide by them.
2. Create a business plan and a growth plan
No matter what business you are planning on building, creating a business plan and a growth plan are two of the keys to its success.
A business plan will outline exactly what it is that your company will do, who are the main people involved, what is your target market, what facilities you will need, what your capital is etc. Having a concrete business plan in place will allow you to build your business according to plan, rather than simply ‘getting started’ and seeing where it will lead.
Think of it like this – houses are built with architectural plans, not by simply building a room and then adding on as needs are. Most successful businesses work the same way.
If you are planning on not only selling CBD products but producing CBD extracts from scratch, then you will need to create a hemp farm business plan.
Side by side with your business plan you should also create a growth plan. This takes the ultimate goal size of the business and breaks down what needs to be done by what time frame to get there, and what are the resources required.
So for example, if you wish to be turning a profit of $100 000 by 2024, your growth plan will break down how many customers you will need to generate that figure and the timeline of goals and milestones that you will need to achieve to realize it.
3. Source high-quality CBD
The next thing to zone your focus on is the sourcing of high-quality CBD. As this is the integral offering of your business you want to be sure that you are selling products that contain the best quality of CBD extracts.
To check if potential sources are offering good quality CBD extracts or raw material, you can request the Certificate of Analysis (COA) for their last batch. This will detail the levels of THC, CBD and other molecular compounds present. It will also outline things like purity and concentration.
Besides this report, you can also check up on a source’s farming methods to make sure that they are ethical and that their raw materials meet the industry standards.
If on the other hand, you are considering making your own CBD oil, then you will need to research this thoroughly, read CBD tutorials, and plan out the production process.
4. Create a killer website
One of the most efficient ways to market and sell your product is through your own website. In order to do this, you need to set up a killer page that looks great, works well and loads fast.
These factors, although they sound obvious and unnoteworthy, are very important to the success of your brand and product. According to data from Akamai, every 100-millisecond delay in page load speed can result in a 7% decrease in sales.
So make sure, when creating your website, that it is fast, high functioning, and looks professional.
5. Get a dependable payment processor
Many payment processors do not wish to accept funds on behalf of a business that is selling CBD products. Even though most CBD products are legal – companies are afraid to deal with CBD outlets which might be selling products that break the fed’s stipulations.
This means that you will need to open a merchant account with a higher risk payment processor that is dependable.
6. Brand like a boss
Branding is the process of establishing your brand identity and familiarizing people with it. To brand your CBD business like a boss, make sure that you do the following:
- Identify your target customer (age, interest, needs, etc)
- Distill down the things that set you apart from other brands (key qualities, benefits, etc)
- Formulate your mission statement
- Create a logo and branding material
- Spread your branding across your business (T-shirts, merch, uniforms, packaging, etc.)
Once you have thoroughly branded your business the next thing to do is spread the word and get people to know your brand. Which brings us to our next step.
7. Get social
With strong branding under your belt, the next stage is to market your brand. One of the best places to do this is on social media.
To really take advantage of the potential of social media, craft a social media strategy that targets your potential customers. You can even create ad campaigns on Facebook, hold contests, and host giveaways.
8. Implement content marketing
Leveraging social is not the only way that you can harness the power of the online market place. Internet marketing has become one of the most rewarding forms of marketing that there is, in many cases beating traditionally forms of marketing such as newspaper and TV adverts by far.
An integral part of online marketing is content marketing. According to research up to 86% of business to consumer marketers (B2C) consider content marketing to be a vital strategy for increasing sales and marketing your brand.
Content marketing is basically the publishing of informative blog posts that are related to your product. These blog posts are designed to garner in web searches, of which a portion of readers are likely to be interested in your offering since they are searching for related info.
To conduct successful content marketing it is important that you put in place a content strategy that outlines what topics are to be written about and over what time period. These topics need to be researched to make sure that they fit the needs of your target audience and customers.
To make sure that the content gets to your audience you will also need to implement SEO (search engine optimization) techniques and keywords into your posts. If you feel ill-equipped to generate this type of content you can always consider outsourcing this aspect of your business.
Go and create that cutting edge CBD business!
Starting a business is not easy. There is a lot of room for failure, and when it comes to CBD the still stabilizing laws don’t make things any easier.
Fortunately, there is a handful of proven processes that you can implement to ensure that your CBD business is a roaring success. And guess what? You now know all about them.
If you are hungry for more startup related insider advice, then stay tuned for our exclusive lessons from successful founders and be sure to explore our blog.