Building a profitable CBD business mainly comes down to two things: building a loyal customer base and reducing unnecessary expenses to help keep margins high. In a rapidly growing market where the end product has only been federally legal for a handful of years, though, this might be easier said than done.
Here are 6 tips to help make your CBD business profitable.
1. Start With eCommerce
eCommerce businesses keep operating costs as low as possible. In a rapidly-growing and competitive industry, online businesses can pivot quickly to meet consumer needs or industry trends.
Starting as a virtual CBD business also enables you to:
- Hone one or a small collection of products
- Spend more time researching competition
- Learn how to communicate with your audience
- Build a social media presence
- Build an email list (and loyalty or rewards program)
As a new or hopeful CBD industry professional, starting virtually is also a great way to become (and stay) profitable with the eventual goal of moving into a brick-and-mortar location.
2. Understand How to Legally Sell CBD Online
The 2018 Farm Bill (finally) differentiated CBD from other hemp products. As a business owner, though, it’s still essential to educate yourself and adhere to strict guidelines when selling CBD online.
Hemp-derived CBD that contains less than .3% THC is legal to sell on the internet. Cannabis-derived CBD could be treated as a Schedule 1 substance under federal law. Individual state laws vary, so do your research to find out what is allowed in your area.
Incurring expenses in the form of penalties, citations, or legal fees could derail even a very successful new business. Shoring up this area can help any CBD business stay profitable.
3. Eliminate Security Risks
The internet offers near limitless opportunities for CBD business growth and profitability. But advantages don’t come without risk. In 2019, for example, small businesses lost $1.5 billion dollars to cybercrimes related to email marketing alone.
A strong foundation for a profitable business starts with protecting yourself. Using the latest encryption tools, keeping software and applications up to date, and investing in safe online payment processing tools should all be top priorities.
4. Invest In Quality Products
Creating truly great products does increase operating costs, but CBD is one industry where skimping or cutting corners can especially hurt profitability. Similar to wine, craft beer, and cannabis, many CBD customers are well-educated and demand transparency and quality from their vendors.
Keeping your business profitable is much easier when you have a loyal base of customers who trust you and rave about your products.
5. Make the Best Offer
Your initial offer is a great way to capture leads and build a bigger base of repeat customers.
Examples of an initial offer include:
- Massive first-time discounts
- Rewards membership or reduced fees for subscription model businesses
- Free samples (perhaps in exchange for an email address)
Look at your competition and other industries for inspiration on your initial offer. Businesses with great offers will stand out.
6. Communicate a Clear Message
With more information than ever being pushed in front of our eyes, confusing and vague messages are easily scanned over and then forgotten. What you’re saying and how you say it online is important for keeping your CBD business profitable.
CBD businesses in particular need to pay particularly close attention to this message. While the general consensus around CBD and hemp products has shifted (CBD used to be considered as a psychoactive marijuana alternative by consumers and the government), many customers still have questions about its potential uses and benefits.
Focusing on education and making science-backed claims can help you build trust and authority with your audience (and even bolster SEO).
