How to get Funding for Your Dispensary
The cannabis industry is booming and running a dispensary is a great way to get your piece of the action, but like in any other industry, investments are key to getting your business off the ground. Often, getting funding to help launch your business can be a long and drawn-out process. Unless, you have the capital to do it yourself, you're going to have to turn some heads to get the resources you need to jump start your business. The question then becomes, how do you get funding for your dispensary?
The trick is understanding investors are playing the same game you are. They want to make money and so do you. So why should they invest in your business? Simple, because you are going to make them money. In this article we are going to discuss some tips and tricks in getting investors to fund your business.
Getting investors is not necessarily an easy process and, if you don't have the right hook-ups, can leave a lot up to the imagination. There is however a criteria to follow. The better you can satisfy this criteria, the better you look in front of investors.
Your dispensary starts at you. So naturally, the best way to pitch your dispensary to an investor is to get them to like you first. Whether or not you have a strong business plan, if your investor doesn't like you, they won't trust you. Rapport building is key. At the end of the day, your investors is not some soulless cash machine, they're people with likes and interests. Finding away to connect on a personal level with your investor is invaluable. However, don't make the mistake of thinking just because you are friends, they are going to let you get away with murder. Business is business after all.
Find industry professionals
It's not unheard of for investors to have a diverse portfolio, however, targeting investors with industry knowledge makes it easier for you to work with them. With the cannabis industry being new and booming, you might be hard pressed to find seasoned veterans. Always keep your eye out for news and big players in the industry. If they are more prone to invest in the cannabis industry then you will be better suited to connect with them on a professional level.
Find your Niche
Nothing excites an investor more than a marketable niche. Niche is the backbone to market development. If you have something new to offer to the table, you're poised to capitalize on a new market. This is exciting for investors because it offers a chance to take advantage of new revenue generators. However, finding a niche is easier said than done. Your niche doesn't have to be a new revolutionary idea. It can be as simple as having a deal with your supplier that will undercut your competition. It can even be a new strain for cannabis you've perfected that has really struck it big with the customers. Whatever it is, it's based on your experiences and ideas to bring something new to the table.
Playing the long game with investments are important. You do this buy keeping your investors confident in the potential for returns on their investment. You can do this using monthly news letters, being attentive and available for your investors, and simply running good business. The best way to keep investors happy is by helping them feel good about their investments.
Potential for growth
You want to understand your dispensary and its potential to grow. We call this scalability. This involves knowing your market, knowing your capital, and understanding the needs of your demographics. It's always a good sign if you can increase your revenue quarterly without expending more resources than you have to. Investors love this and if you can produce this kind of scalability consistently, you'll be the one startups are looking for investments from.
Cornering Your Market
Dispensaries are a dime a dozen so what factors help you corner your market? This ties in closely to finding your niche. Your investors want to be confident other dispensaries won't pop-up and run you out of town. Finding a way to take control of your target area or demographic is key to cornering the market. These can include things like utilizing more efficient technology, having the right hook-ups, deep rooted connections with your client base, location, or high-profile customer contracts. The harder you make it for the competition, the better off you will be to corner the market.
Your business is like a ship and the investors want to know their money is in good hands with your crew. Your staff is the point of contact between your business and the client. Any discrepancies between your staff and the client will directly affect your revenue and even indirectly affect the longevity of your business. It's important to know your staff are on the same page as you and you all share a common goal. Work ethic is present and they understand what they are doing and why they are doing it. After all, running a dispensary is still considered a retail business. Thus, customer service needs to be high on the priority list. Making the right impression on a possible investor is a team effort. Show them your staff is willing to play ball, there is an plan and they are working together to make that plan work.
Conceive an Exit strategy
An exit strategy refers to the method in which you exit that particular business venture. After all, once your investors have put their resource into your business, you can't just take their money and run. Exit strategies usually entail selling your business or offering an IPO. This may work a little different with dispensaries given different governing policies but that is not to say you can't be the owner that goes public and runs a successful dispensary chain. Forward thinking is key to conceiving a strong exit strategy. Think about where you plan on taking the business and what the market is going to look like when you are ready to move on. Will their be potential buyers in the next ten years, and why? Regardless of whether you are in it for life, it's good to develop an exit strategy because it shows your investors their has been conscious effort into understanding every aspect of the business.
Setting The Right Price
Finally, investors will only invest in your dispensary if they feel the price is right. If you are in a scenario where you've over valued your equity you might be inhibiting the potential for investors to make significant returns, this can be a total turn off. We visualize this on the show Shark Tank all of the time. The entrepreneur says, as an example, that for $400,000 they are going to give up 10% of their corporation. The sharks routinely laugh at percentages like this and mention they'll need at least 40% of the firm or more for that dollar amount.Understand While the sharks tend to be much more sophisticated, and shark-like, than several "angel" investors, you've got to price your equity fairly (give them a fair equity stake for their investment) in case you want them to fund your cannabis investment.
As mentioned earlier, funding is key to getting your start-up off the ground. Nothing is out of reach for anyone if they are willing to work hard enough for it. Investments are always helpful but they open a whole new world to responsibility and accountability. If you think you finding investors is the right move for you then use these tips and tricks as a starting point to get you thinking on the right track. We hope this article has been informative for you.