Failing businesses have become an everyday occurrence in the modern retail world. Whether it is cash flow or other problems, one-third of businesses fail after only 2 years, and a business fails every 12 minutes. Retailing is much more challenging than a simple operation on a debt/profit basis. An outlook change is becoming more and more important when it comes to dispensary supplies wholesale and other ventures connected to marijuana.
With the legalization process being in full swing, it’s much harder to retain a constant influx of customers and trust within the supplier-owner-customer triangle. Thus, to have your MMJ containers make a name for themselves, you have to avoid these five retail business killers.
Avoiding these business sins will allow your ideas to flourish and your business to succeed. They’re far from complex and encompass everything important in the world of cannabis culture.
Failure to manage your gross margin
By taking your dispensary’s total sales revenue and then subtracting the COGS (cost of goods sold), and diving the total revenue, you get your gross margin percentage. It is displayed as a percentage. Managing this percentage and tracking it on a regular basis is supposed to be the “sturdiest column” in every business endeavor.
Many dispensaries get caught in the infinite loop of lowering the margins so that they can lower their prices. They do this in vain, just to compete with competitors. However, this modus operandi leads to business failure.
The entrepreneur is following what others are doing, without improving his own service. Some retailers cut down on their funds for custom cannabis packaging, all to strike down their subjectively high gross margin percentage.
Instead of cutting down on your expenses, make a plan that functions independently of other competitors. The key is being special and observing the market. Observe the dispensary supplies and specialized pop top containers that are popular and try to improve on that same principle.
Staying special will increase your revenue and lead you to your goal. It can become the leading medical marijuana retailer in your area, for starters.
An ill-controlled inventory
This business sin continues the problem of gross margin dollars being not-so-well spent and generated. We can’t ignore the bad management of inventory by even some of the biggest dispensaries out there. Having the option of buying more and more popular items is an enticing one, and many retailers fall for this trick. Basically, most retailers “get carried away” by limited time offers on items that have swarmed the best-selling list. For example, you may see that your pop top bottles are selling good and all of a sudden – you buy 50 more boxes.
This mistake is easily prevented by – letting go of the pressure. The only sales aspect you should follow should be your own. Getting overwhelmed by your competitors’ best-selling MMJ containers or new hybrid strains is a slippery slope.
Also, another good addition to your dispensary’s program would be customer polls. That way you can strengthen your sales influx, as well as make the introduction of news items a surefire success.
Additionally, you shouldn’t be afraid to overstep your monthly/yearly budget and explore a new idea. Thinking out of the box yields amazing results, as it might lead to a positive restructuring of your entire medical marijuana business.
An out-of-control balance sheet
Taking a look at the relationship between your income and expenditure is something you should do as often as possible. A balance sheet is something that should be monitored closely. Casting glances at the movement of your earnings and expenses are paramount when you intend to open new dispensaries or expand into new lines of business.
For example, if you wish to alter your dispensary packaging or try out a single batch of new pop top containers, you should be aware of your balance sheet. An astonishing 45,000 businesses close on a monthly basis, according to a 2010 survey by the Small Business Administration. One of the reasons is a problem with the balance sheet.
Knowing your financial strength in advance is a great way of assuring you will get more revenue. When experiencing growth, every business has two roads by which it can reach the mandatory increase in assets – more profits or debt. The second road is the one that more and more medical marijuana retailers choose to take, unfortunately.
After all these years, only expense management has maintained its steady existence as a premier factor in running a business. With the rise of medical marijuana retailers in recent years, a pattern was noticed. More and more retailers who file for chapter 7 or chapter 13 bankruptcy do so because of large, almost unreturnable debts. Why is this the case?
The answer lies in a lack of cost-efficient business running. Having an a priori set budget will allow you to keep track of your expenses. This will increase the number of fixed, constant expenses and reduce the possibility of new and unpredictable ones appearing. There is so much to track nowadays – the changing strain prices, MMJ container, dispensary specific packaging and so on.
Also, having a fixed budget doesn’t only reduce unnecessary spending – it can allow you to track any budget side-cutting. For example, if you manage to invest more in pop top bottles this month than the last, you will know exactly what worked and you can repeat it.
A lack of finances
Being on a limited budget is merely an epicenter of a problem that is felt around the world, concerning business failure. Retailers who operate on a loan and return basis are destined to fail. The key to avoiding bankruptcy and any form of failure lies in the notion of having a constant influx of profit, not just on select dates.
Surely, you are aware that certain periods of the years yield increased revenue (and that you can manipulate them to your advantage). However, having a constant flow is something that allows for emergency fixes, expenses, and purchases of all sorts. Failure to do so leads to a slippery slope of deteriorating relationships with both suppliers and customers.
We at Green Rush Packaging chose for both routes. There are competitions and discounts during the holidays. In addition to this, we also introduce new products in an attempt to refresh the market.