The CBD industry has become a formidable entity in 2019. With increased attention on the 2018 Farm Bill for hemp-derived products, a lot of businesses have started to venture into this industry. Whether it is interested customers looking to spend money or entrepreneurs wanting to invest, the potential is there for sustainable success.
Experts are starting to cite the importance of CBD products and how economically viable they are as a business opportunity. While CBD products are still stabilizing among mainstream opportunities, there has been added pressure on making them legal in all states. This is ideal for those paying attention to the direction these products are going in and how they’re designed. For now, a lot of CBD products are being released for pets, coffee, ice cream, and other senior-related items. The beauty of CBD is seen in its oil form as that tends to be a great starting point for new businesses to build a strong inventory. According to studies, over $5 billion has been spent in 2019 on CBD products and the numbers are rising heading into the next decade. Along with these impressive projections, the industry is also expected to hit overall sales of approximately $24 billion. This demonstrates the viability of building a new CBD company and what it can offer to those jumping in now. For those interested in starting a CBD brand, here is a detailed guide on what it takes.
Creating a Business and Brand
To set a strong foundation for your business, it’s important to research what’s selling and what’s not in the CBD industry. What type of products are you hoping to sell? Do you want to stick to traditional oils and oil blends or do you want to move towards wellness items (i.e. salves, creams, soaps)? These are pertinent questions considering you can focus on CBD infused edibles (i.e. gummies, chocolates) or remain fixated on traditional self-care items. It’s all about making a decision, creating a reasonable inventory, and then selling them to the masses. It’s important to note for those selling edible items, there are added regulations in place to make sure the products are fully compliant. These regulations need to be kept in mind before diving in headfirst. Take your time to do a bit of research on what’s permitted and what’s not before building an inventory of products.
After a decision has been made on what direction to go in, it’s time to set up a proper CBD company. You are going to want to understand how the industry works, how each product is sold, and what name is going to work well for your brand. These details are key in laying down a good foundation that will only get stronger with time. To learn more, you should be willing to see what other CBD business owners have done in recent years when it comes to their branding. It’s always best to create a straightforward name and business plan, so you cna quickly sign up for financing without raising alarm bells. Otherwise, banks are going to hate working with you and may refuse to provide funds to a business that is deemed shady in their eyes. You should avoid limiting your reach as a CBD brand. This means your name should be generic rather than something that will restrict how you grow the inventory. It’s also smart to look at available domains online before deciding on a name because the website should be the same as your brand.
With the name in mind, you can start filing for an LLC and a Federal Tax ID number. These are necessary to ensure you are following all necessary IRS requirements before moving forward with the business. Make sure to pay your registration fees and reach out to websites such as Legalzoom for more information on getting these steps done.
Focus on the Branding and Logo
Having a meaningful brand and logo is essential. It should build around a proper theme, which includes the use of high-end colors that flow together. If necessary, you should be looking to bring in a qualified logo designer to help create something empowering and unique. The designer will play around with the colors, shapes, and fonts to make sure it fits what you want. It may not happen immediately, but a quality brand and logo are a must to do well in this industry.
Create a Business Bank Account
Visit your bank and set up a business account. In this case, you don’t have to mention that it’s for a CBD business. It’s easier to focus on the larger niche (i.e. health and wellness) to keep things moving along at the speed you want. They will set up the bank account under your EIN and the merchant account as well. During this time, it’s also best to look for a highly-rated CBD merchant processor.
Find the Right Supplier
Most businesses aren’t going to be creating in-house CBD products when starting. Instead, you are going to want a high-value supplier with great reviews. The supplier is going to handle this part of the business and will ensure the quality control is on par with your requirements. It’s not easy to find a good supplier and this is a step you have to focus on properly. Do your research, see what others have to say about the supplier, and make sure they are willing to work with your demands. Don’t settle for less because customers are going to notice the lack of quality immediately. When you’re dealing with the wrong type of supplier, it leads to many customers returning products and that’s a hassle no one wants to deal with as a business owner. Keep things simple, focus on building a viable supply chain, and ensure you are going to a supplier that knows how to create world-class CBD products. This is how your reputation is going to get better in the industry and lead to a reputable brand.
Build a Quality Website and Set Up Social Media Accounts
Having an online and social presence is key as a CBD business. In general, you are going to want to begin with a personalized website that matches your business and its underlying theme. This is going to vary based on how much mone you can spend on the process but it’s often recommended to go with a top-grade web designer. They will know how to quickly personalize the website and make sure it resonates with your target audience. Otherwise, you are always welcome to move forward with a traditional website design template and move forward from there. The template is going to ensure the website functions as necessary and is ready to go quickly once it’s filled out. A lot of new businesses go with freelancers and/or agencies to do this type of work and that’s up to you. Look at the costs and determine whether or not this is the way you want to move forward with the website. Always make sure the website has relevant, up-to-date content that is in line with your business and its overall vision.
Along with having a good website, you have to start concentrating on building social media pages for the business. A lot of users will interact with your business through social media accounts on Twitter, Facebook, Instagram, and Pinterest to name a few. It’s important to build strong, engaging pages that are relevant and interactive. By doing this, you will have an easier time generating social links to your website and bringing in new leads. Plus, you can always integrate the social media pages with your website by placing icons on the homepage. This is when your social media strategy is going to generate amazing results.
Optimize Fulfillment Strategy
Fulfillment is an essential component of your CBD business and has to be done the right way. Otherwise, customers are going to be enraged and will leave you with scathing reviews.
You can often rely on private label manufacturers for this process as a new business. They will have a set fee for the fulfillment process and are going to ensure you get high-quality service from their team. Of course, some startups prefer doing it all in-house and that’s a direction you can decide to go in. It’s all about whether or not you have a quality warehouse in place and how much experience in fulfillment processes the team has. This is going to vary depending on the type of company and how you’re doing financially. For a small business, you may want to keep things simple and start with a small garage before working your way up. There are also situations where you can sign up for a fulfillment center to store inventory and ship from. This will take a while to maximize but when done right can save you quite a bit of money.
Create a Marketing Strategy
How are you going to market the business when it is time to sell CBD products to the masses? If people don’t know about your product(s), how are they going to make the purchase? This is why marketing is all about building a proper strategy and implementing your vision. To do this the right way, you will have to research the target market, find the latest trends, and make sure you are aware of potential regulations involving selling/marketing CBD products. Always keep tabs on the news and make sure you are ahead of legal changes as a business owner. While marketing, you will always want to have room to adjust when the law changes. For branding, it’s smart to focus on brand awareness and letting people in the community know about your products. This can be done in several ways whether it’s through search engine marketing, email marketing, social media marketing, search engine optimization, and other types of marketing. In many cases, you will want to bring in a marketing agency to handle these requirements, so you can focus on the other side of your business. The most important tip a person has to remember is the value of diversification. You want to spread your options out and use different marketing channels rather than relying on one. This is the only way to ensure your traffic source doesn’t dry up and ruin the business. Also, always keep tabs on how the marketing strategy is doing and how it can be tweaked. Being creative is a must when it comes to growing as a company.