There’s a reason why people like to say “been there, done that”. Someone who has learned how to handle a situation, or a business, has done so with a lot of trial and error. Yes, some things were figured out easily. But a lot of things in life, and in business, are learned the hard way. For those who have experienced success in the marijuana industry, there is no exception.
Thoroughly understand the concept of margins and gross margins
If you sell $100,000 worth of products and your cost for those products is $65,000, your gross profit is $35,000. Your gross profit margin is 35 percent. Thus, to find your gross profit, you subtract inventory costs from sales.
When making purchases for your store, you need to consider the cost of those products along with gross margins. In order to make wise purchases, you must consider approximately what margins you need to make based on your sales and expenses. In balancing your inventory with a combination of higher and lower margin products, you can achieve some flexibility.
Keep in mind that lower margin products can sometimes bring prestige to your store. Highly valued and sought after strains of cannabis also means that growers will charge more for pounds. In order to offset these lower margin products, a business can buy some less expensive, higher margin product.
Obtain and Maintain the Right Inventory
One of the most important aspects of successfully running a marijuana dispensary is having the right inventory; this also involves choosing the right inventory manager. They must be a real weed “geek” in that they can recognize strains and subpar trim jobs. Years of experience and a passion for the job are involved in acquiring such a skill set.
A good inventory manager must also know the market. What strains are currently the most sought-after? What new products are up and coming?
The optimal inventory will change from state to state, area to area, and shop to shop. Whether the inventory is recreational or medical based will matter as well. One fact is true across the board – the right mix of flower, concentrates and edibles is essential.
Overcome the banking challenges of the industry
Banking has and continues to be one of the biggest challenges for the marijuana industry. Although the acceptance of cannabis has come a long way, it is still illegal on the federal level. As a result, banks tend to turn and run the other way.
If you find a bank in your state willing to work with you, jump on the opportunity. For the majority of businesses however, this is not the case. It goes without saying that operating in cash is simply inconvenient and incredibly unsafe.
To find solutions tailored to the industry and to avoid operating in cash only, businesses are turning to high risk providers for their marijuana business funding needs. High risk processors specialize in working with industries considered high risk. Their application processes are also simple, fast and hassle-free. Basic documentation is required, unlike the endless red tape you will likely experience with traditional institutions.
Take advantage of the information from those who have “been there, done that”. Maintaining the right inventory, watching your margins and securing business funding will strengthen your business. Don’t let mediocre inventory and banking challenges hold you back.
Contact us for Marijuana Business Funding Today!