With the US market alone expected to be worth $24.4 Billion by 2024, it’s no surprise that many aspiring entrepreneurs are interested in starting their own business in the CBD industry.
But as someone who’s spent the last few years growing my own CBD company, along with my brother, I can safely say that it’s not for the faint of heart.
There are far more challenges now than there were just a few years ago, but there are still opportunities out there for those willing to put in the hard work.
If you’re considering starting your own CBD business, or you’ve already started your journey, here are 7 tips to help you grow your business in 2021, and beyond.
Make Sure Your Product Is Top Quality
The most important factor when it comes to starting or growing a CBD business is the product.
With so many customers being stung in the past by unscrupulous companies selling substandard products, consumers are paying more attention to the products they’re buying.
To stand out in today’s crowded market you’ll need to have strong branding, quality product packaging, and lab reports that show your product, and its ingredients, are the best they can possibly be.
Not only that, but you’ll also need to know what you are talking about, and have a passion for health and wellbeing.
If you are just wanting to make a quick buck and jump on the CBD bandwagon please give up now.
Chasing after money becomes very apparent very quickly and will be found out by vulnerable people who are asking you questions about their health – often very serious questions.
If you have no expertise in this area I would suggest you get some education or find another opportunity in another line of work.
Don’t try to pretend you know what you are talking about – become an expert.
Focus On Organic Growth
While some brands are able to capitalize on paid advertising channels, we’ve found that they can be very unreliable.
Despite CBD being legal in the UK and Europe, we’re unable to use advertising platforms such as Facebook or Google Ads to promote our products, making it much more difficult to acquire customers.
If you’re focused on long-term growth rather than a short term profit, organic growth with SEO and social media is the best option for growing your business.
While it might be much slower in getting results, building a good quality website, providing your customers with high-value content, and building a solid social media presence can bring in consistent levels of traffic to your site for months, if not years to come.
But don’t be tempted to try and hack this growth.
I’ve seen many sites over the last couple of years that have crashed and burned because they were too focussed on paying for hacks and quick wins that ultimately led to their site being penalised or their accounts being suspended.
If you’re planning on doing it right, you need to be playing the long game!
Build Relationships With Influencers And Affiliates
A lack of paid acquisition channels can be frustrating at times but in reality, it just means we have to be more creative with the channels we do use.
Two great channels for CBD businesses are influencer marketing and affiliate programs.
Finding influencers to work with can be tough, and some won’t want to work with CBD brands as there’s still a stigma attached to businesses in the cannabis industry, but we’ve worked with a number of influential people in the health and fitness industry.
Don’t be fooled into paying high premiums to work with influencers with large follower counts as these don’t always equate to results.
We’ve had several instances where micro-influencers with smaller followings have outperformed promotions by accounts with much higher follower numbers.
Focus on finding influencers whose goals align with yours and whose followers will be interested in what you have to offer.
Affiliate programs are also a great way to bring targeted traffic to your store, and since you only pay the referral fee when a purchase is made, it’s also great value.
Use Automation To Nurture Potential Customers
As you start to drive traffic to your site, and the number of sales starts to increase, you should be aiming to move these customers and visitors onto a mailing list.
Abandoned cart emails are a great place to start with email marketing, and can have an immediate impact on the ROI of your marketing efforts.
As you continue to grow, however, you should start to think about content or offers you can offer to your visitors in exchange for an email address.
We offer our visitors a PDF guide that adds them to an email automation that tells them all about us, what we stand for, and how our products are different from others on the market.
The open rate of these emails is incredibly high, at over 80%, and it helps us to build a relationship with our customers before they even make a purchase.
Grow Recurring Revenue With Subscriptions
One of the downsides of running an e-commerce business is that the revenue can be unpredictable.
Although the overall trend line might be going in the right direction, it’s not uncommon to have months where your income drops fairly substantially.
To try and mitigate this, we introduced subscriptions to our business last year, and we’ve seen a steady increase in the amount of recurring revenue every month since it went live.
Knowing there is a consistent amount of revenue coming into the business each month means more money to invest back into the growth.
Speaking of which…
Invest In Your Growth
Growing a business of any kind takes investment.
However, just a few years ago, it wasn’t uncommon to see scammers setting up sites that appeared overnight, selling inferior products (or even no products at all) and making a fortune before disappearing off into the night.
Thankfully, as the industry has grown, that’s become far less common, but that makes it a whole different ball game.
While before we were competing with scammers, CBD businesses nowadays have to compete with established brands and household names such as Holland & Barrett and Boots as they begin to sell their own range of products.
Whereas before a small team of one or two people could throw up a site and compete with the rest of the businesses on the market, we now work with a marketing agency, website designer, development team, product photographers, and many others just to stay competitive.
If you’re not prepared to invest, I’m afraid you’re just not going to be competitive.
Embrace The Regulations
While some people considering starting a CBD business might be put off by the fact that the CBD industry isn’t the get-rich-quick landscape it once was, those that will be truly successful are the people who embrace the cannabis industry’s regulations.
Joining a trade association and investing in lab reports to verify product quality all go towards proving that you’re more serious about growing your business over the long term than just growing your bank account.
Increased regulation might be difficult, but it helps to legitimize the industry for everyone, and ultimately helps all of us to grow.
The Bottom Line
The bottom line is that growing a CBD business in 2021 is tough, but not impossible.
It does, however, take the right attitude.
While the initial “Green Rush” might be over, and the barriers to entry have increased, there is still room for small brands to carve out a niche within the CBD market and create a business that will last.
If you’re just looking to make a quick buck, the CBD industry is not right for you.
But if you want to create a business that makes a difference, and you’re in it for the long haul, then welcome to the club!