What You Need to Know Before You Decide to Sell Your Business

Higher Yields Consulting What You Need to Know Before You Decide to Sell Your Business

In a saturated cannabis market like Oklahoma, it’s extremely difficult for small businesses to get off the ground and be able to compete. So if you’re struggling as a cannabusiness owner, you may be wondering if it’s time to sell your business and get out altogether.

However, if you know how to look at a distressed business the right way — and if you have the right experience — there are still opportunities to make it work. Once you identify why your business is in distress, you can determine the best move forward — whether that be selling your business or not.

Higher Yields Consulting What You Need to Know Before You Decide to Sell Your Business

Read on to learn what might be causing your business to struggle and how to decide whether you should sell your business.

Why Are Cannabusinesses Struggling?

According to Anthony Edward, HYC’s Director of Business, cannabusinesses fall into distress for several reasons. “It’s a trifecta of lack of funding, lack of support and help, and lack of output or foreseeable growth,” he says.

One of the biggest mistakes we see is that people get into the industry and underestimate timelines, resources, and budgets. Markets like Oklahoma are so easy to get into that people jump right in without knowing what they’re doing. They assume that because marijuana is a weed, it’s going to grow itself. But it won’t. 

Businesses that don’t know what they’re doing end up running out of money before even getting off the ground. Sometimes they grow inefficiently and have to charge higher prices for low-quality products. Other times they fail to ensure compliance from the start, which ends up costing more time and money in the long run.

And, as Edward points out, these issues can stem from a lack of viable operators who are taking the business seriously. “We’ve spoken to several businesses in Oklahoma that were struggling with operators, head growers, or general managers,” he says. “It’s eaten into their profitability, efficiency, and also the quality of their products.”

People get into the industry thinking they can get these astronomical revenue numbers they see in other states. But without understanding their own markets, they greatly overshoot their projections and underperform. So the question is, can you recover from early-stage missteps, or might it be time to sell your business?

What Options Does a Distressed Business Have?

If you’re struggling in one or more of the above ways, you may think that your only option is to sell your business — and that is one option. 

If you do choose to sell your business and exit the industry, make sure you do so properly. According to Edward, with expert help, you could at least get some of your investment back or be made whole on it. 

But selling might not be your only option. Many people don’t think about marketing and branding until it’s too late, but improving this one area could increase your traffic and sales. Work on standing out from the crowd by establishing a credible online presence and improving your overall customer experience.

Higher Yields Consulting What You Need to Know Before You Decide to Sell Your Business

A third option is to reinvest with the right partners. If you’re only missing one puzzle piece — that is, if it was simply one bad decision or mistake that put your business in distress — you could greatly increase its equity value by bringing on the right partners and making small investments in the right people.

Whether you ultimately decide to sell your business, improve it, or reinvest, you’ll need to figure which path is best for you and pivot in a way that mitigates risk. 

Is It Time to Sell Your Business?

As you consider whether you should sell your business, Edward advises evaluating your situation to get clarity on where you are right now, what your vision for the business was, and the gap between the two. 

Be willing to approach the decision unemotionally and with an open mind; it can be hard to give up on your dream, but this needs to be a business decision, not an emotional one. 

If you want to sell your business, take the time to get your financials and lease documents in order. Your business will look better to a potential buyer, thus increasing your likelihood of making a sale.

Make sure that additional management or investor partners are also ready and willing to be involved in making the decision, even if it’s a hard one to make. 

Finally, seek out help from experts. As Edwards says, “be open-minded to directional leadership from experts in the industry. Be ready to engage and have a dialogue, and keep everything on the table until it’s not on the table anymore.” Relying on expert guidance will equip you to make the most rational, well-informed decisions. 

Are you ready to take an in-depth look at your cannabis business? Before you decide to sell your business, get in touch with the expert consultants at Higher Yields Cannabis Consulting.

Do’s & Don’ts of Creating a Standout Marijuana Logo

Higher Yields Consulting Do’s & Don’ts of Creating a Standout Marijuana Logo

If you’re just starting out as a cannabusiness owner, you may be tempted to cut costs by DIY’ing your marijuana logo. But don’t make the mistake of scrimping on this important piece of marketing. People do judge a book by its cover, and your logo may well be your only chance to make an impression on potential customers.

Adam Kolbach, HYC’s head designer and media production expert, has seen it all in terms of logos — especially terrible ones. “I’m amazed at how people spend millions of dollars and tons of effort working 18 hours a day on their business, and then they’ll just make their own logo,” he says. 

Higher Yields Consulting Do’s & Don’ts of Creating a Standout Marijuana Logo

Your brand is how you sell your product. People are overwhelmed with information, so you have about two seconds to capture their attention before they move on to the next product. If your marijuana logo doesn’t stand out, your cannabusiness will blend into the background of all the other businesses out there. 

Read on to learn all the do’s and don’ts of creating a marijuana logo that makes a memorable — and positive — first impression.

Marijuana Logo: What Not to Do

The first mistake to avoid is creating a generic marijuana logo, which camouflages your brand. Elements like green crosses and cannabis leaves are overused, boring, and instantly forgettable. Step away from the status quo.

Don’t use stock logos and slap your company name on there either — anything that lacks inspiration or creativity will translate into a mediocre experience for your customer. Don’t be mediocre. 

Kolbach also advises not going with your first idea. “You might say, I like boats, so I’ll put a boat on there,” he says. “But you’ve got to think: Is that really going to sell your product?” The marijuana logo must stand out to your customers, not just to you. 

To avoid backlash, be very careful not to appeal to kids. Take notes from the Joe Camel controversy, and leave out any kind of characters, especially cartoons. Even if your marijuana logo is animated, aim for more realism and less goofy caricature. 

Finally, don’t make your marijuana logo yourself. As the business owner, you’re too close to your brand to see what really makes it special. A third-party advocate, on the other hand, won’t have that kind of tunnel vision. And while you may know cannabis very well, you probably aren’t an expert in marketing and branding strategy.

What to Do Instead

For inspiration on creating a standout marijuana logo, Kolbach recommends studying the craft beer industry. “There are so many great logos there, and they all fight for attention,” he says. In contrast, the cannabis industry tends to lack imagination.

Higher Yields Consulting Do’s & Don’ts of Creating a Standout Marijuana Logo

Instead of following trends, look at your market and ask yourself what’s missing. What can you do with your marijuana logo that no one else has done? Then, test your ideas on a focus group of friends and colleagues, but do so without attachment to the results. You might be surprised by what they tell you.

Take, for example, a black cat logo that Kolbach once designed for a music company. “It looked really cool and grabbed attention,” he recalls, “but it turns out most people hate cats. And especially black ones.” Kolbach was shocked by the feedback, but redesigned the logo into a robot instead, to a much better reception. 

As you gather ideas, work on getting to know your brand, your products, and your audience. Ask yourself questions like:

  • Why did I get into the cannabis industry?
  • What makes my brand different from others? 
  • What does my brand stand for? 
  • Is my brand premium? Economical? 
  • Who do I want to sell to? (Think demographics — gender, age, occupation, stage of life, etc.)
  • How can I build the bridge between my product and my audience with the brand?

The more you understand about your brand identity and your audience, the easier it will be to craft a unique and eye-catching marijuana logo. 

Trust Your Marijuana Logo Designer

Once you have a solid understanding of your brand identity and your audience, work with an expert to design your marijuana logo. Trust their expertise —  and their creativity. 

At HYC, Kolbach is a master of ingenuity and branding innovation. His final advice is to let your designer go wild, bold, and as far out of the box as possible. You can always reel the design back in, but you can’t amplify a safe, boring concept. 

For more information and guidance on creating a marijuana logo and building your cannabusiness, reach out to us to schedule a consultation.

What to Include in Your Dispensary Business Plan

Higher Yields Consulting What to Include in Your Dispensary Business Plan

Before you open up your dispensary, it’s important to have a solid dispensary business plan in place. More than just a simple outline, this plan must be detailed and well-researched, so it’s never too soon to get started. 

Ideally, you want to have finished your dispensary business plan before you talk to any investors. That way you can pitch your business to them in conjunction with your financial model and demonstrate your preparedness.Higher Yields Consulting What to Include in Your Dispensary Business Plan

It’s also a good idea to make your business plan before you even apply for the dispensary license, because many of the items you’ll include in your dispensary business plan will be required for the application process anyway. 

Here’s everything you need to include in your dispensary business plan, especially in terms of market research, real estate, marketing and branding, and financial modeling. 

Dispensary Business Plan Essentials

A dispensary business plan consists of many different and detailed sections, all of which will help both prepare you to open up shop and entice investors to take a chance on your cannabusiness. 

The main sections you need in your dispensary business plan are:

    • An executive summary. An overview of your brand, who you are, and your goals. 
    • Team bios and qualifications. Information on each team member’s background and why they’re qualified for their intended role. 
    • Market research. Research on the cannabis industry as a whole, the state you’re looking to operate in, saturation, competition, and trends.
    • Marketing & branding. A brand guide and plan for building consistency and consumer trust.
    • A business roadmap. A plan for what will happen through your business lifecycle. 
    • Real estate and facility requirements. Information on the potential property, including its value and whether it meets local requirements.
    • Your application: Information on the state’s requirements and how you’re able to meet those requirements. 
    • Compliance. Research showing that you understand the importance of compliance and how you plan to meet compliance requirements for your intended license type in your intended state of operation, including SOPs and employee training programs.  
    • Design and build. A step-by-step plan for the facility’s layout, construction, and timeline.
    • A financial model summary. A summary of the financial plan for your business, including expected costs and projected revenue.
    • Anything else of importance to the unique application. Research into processes you will need to learn, best practices — whatever you feel is important to include. 
    • Anything unique about your business to help you stand out. Plans for how you will make your brand stand out from others, especially if you’re entering a very saturated market. 
    • Future business development plans. A summary of your business goals and where you want it to go in the future. 

Each section should be as detailed and concrete as possible to ensure you are thoroughly prepared. 

Research, Projections & Brand Identity

Now that you have a general overview of the essential sections to include, let’s take a closer look at what’s required for a few of them — namely, market research, real estate, financial modeling, and marketing and branding.

Market Research

The market research section of your dispensary business plan is there to show the value of the industry: how much it’s growing — in your state, nationally, and globally — and how much money is expected to be made over the next five years or so. 

Your market research should cover aspects such as saturation, the market’s development over time, whether the state is competitive or non-competitive, and how many licenses the state will be giving out. 

Articles from Forbes or other data analytics companies in the cannabis industry that project what the market is going to do over the next year and how much money is expected to be made can also help to beef up your dispensary business plan.

Higher Yields Consulting What to Include in Your Dispensary Business Plan

Additional market research is useful to show investors just how big the industry is, that it’s not slowing down, and that it’s not expected to slow down anytime soon. 

Real Estate Location

Your dispensary business plan should also highlight the property you’ve decided on, or all of your potential properties if you haven’t decided on a specific one just yet. 

You’ll want to do a green zone assessment on the property to show that it will be zoned properly. Keep in mind that the state and the municipality will each have their own particular requirements, so you’ll need to look at both. 

Also include information on demographics and spending trends in the area. If you know what the spending in the area looks like, you can get an idea of what piece of that percentage is going to come to you. 

Finally, research the location in general. Is it on a main street or major highway? Are you planning to rent or buy? This information will also be important for the financial modeling section of your dispensary business plan. 

Financial Modeling 

It’s important to know all of your setup costs ahead of time and account for them in your dispensary business plan. What will it cost in terms of equipment, goods, utilities, and employee payroll to get your business fully operational? 

Once you have your setup costs laid out, go over the anticipated first five years of your business, month by month. As your business grows, how much do you expect it to make over the next five years based on the costs and the projections from your market research?

Marketing & Branding

The marketing and branding section of your dispensary business plan should include a comprehensive brand guide that compiles your color scheme, font, all versions of your logo, and any other branding specifics in one place. 

Your brand is your opportunity to tell your story and make it relatable to your customers, and it’s also a way to build trust through consistency. Keeping your branding cohesive across all online platforms makes it easy for customers to recognize and trust who you are.

At Higher Yields Consulting, our expert consultants have experience putting together successful business plans that can serve as the foundation of your application. For more guidance on crafting your dispensary business plan, reach out to us to schedule a consultation. 

A Guide to New York Marijuana License Applications

Higher Yields Consulting A Guide to New York Marijuana License Applications

New York and New Jersey started out neck and neck on their paths to legalizing adult-use cannabis. Although New Jersey pulled ahead — and is set to announce the 2019 license application round winners at any moment — New York marijuana license applications are expected to follow shortly.

In New Jersey, all municipalities are opted in to the decision to allow cannabis in their towns by default, unless they decide to explicitly opt out. They have until August 21 to opt out. As we wait for more news from New Jersey, we can speculate that much of New York’s upcoming legislation will follow similar pathways.

Higher Yields Consulting A Guide to New York Marijuana License ApplicationsHere’s what to expect in regards to the upcoming New York marijuana licensing options and how you can prepare to apply.

Legalization & Delays for New York Marijuana

New York marijuana legalization started with Governor Cuomo’s Cannabis Regulation and Tax Act at the beginning of the year. In March, Cuomo and the New York legislature agreed on the Marijuana Regulation and Tax Act, the main differences being related to taxes and social equity. 

Similar to New Jersey, New York municipalities have until the end of the year to opt in or out of legalization. The tax part of the bill takes effect in April, so sales wouldn’t be able to begin until after that. From this, we can deduce that the application round is likely to happen between January and April. 

However, with more potential delays due to Cuomo’s controversy and resignation, dates aren’t set in stone just yet. 

New York Marijuana License Types

Once New York marijuana license applications open up, there will be a number of different types of licenses available, such as:

  • Cultivation
  • Processor
  • Distribution
  • Retailer/Dispensary
  • Delivery

Additionally, New York will also be offering several unique and interesting license types, some of which are completely new.

Nursery License

The first of New York’s unique license types is the nursery license, which allows the license holder to produce plants — clones, immature plants, and seeds — specifically for cultivators, co-ops, and microbusinesses to buy. 

A nursery license is different from a cultivation license in that the nursery would be a standalone provider of plants to cultivators, much like a wholesaler providing goods to a manufacturer.

Co-op License

A co-op, by definition, must be democratically controlled by its members on a basis of one vote per member, and must abide by seven cooperative principles set forth by the International Cooperative Alliance

Interestingly, co-ops in New York must be owned by a New York resident. There may be a possibility for a workaround if you’re from out of state but filing in New York, but the parameters of doing so are still unclear.

Higher Yields Consulting A Guide to New York Marijuana License Applications

A co-op license is almost like a built-in, vertically integrated license, since members of a co-op are allowed to cultivate, process, distribute, and sell from the co-op. However, the caveat is that they’re not allowed to sell directly to cannabis consumers. Instead, they can only sell to licensed distributors. 

Microbusiness License

A microbusiness can be a processor, cultivator, distributor, and retailer. Usually, they have size limitations and are for state residents only. 

The limitations for New York microbusinesses have yet to be clearly defined. But judging by what New Jersey has said, we can guess that the New York marijuana microbusiness license may be limited to around 1,000 plants and a handful of members. 

On-Site Consumption License

There isn’t much available information about the New York marijuana on-site consumption license just yet, but parameters appear to be similar to Nevada’s upcoming consumption lounges

On-site consumption businesses will, of course, face location and leasing restrictions. For example, a business can’t be vertically integrated or lease property from government agencies, and the property can’t be within 500 feet of a school. Also, only three on-site consumption licenses are allowed per individual investor.

More information on this license type should come in the future. For now, it seems likely that New York is waiting and watching Nevada to see how the consumption lounges work out before further defining the limits of the on-site consumption license. 

Roadblocks to Success in New York

If you’re looking to apply for a New York marijuana license, it’s important that you solidify your property as soon as possible. New York is going to be very competitive, and finding property that works with setback regulations and other real estate requirements is going to be challenging. 

Once New Jersey opens their application round, New York will feel the pressure to open up its licensing round soon after, so as not to fall behind and lose out on the market. That means the time to start preparing is now!

Make sure you work with a consultant who has a good understanding of application requirements so you have the best chance at success. Knowing what we do about New York marijuana licensing, the biggest mistake you can make right now is thinking you have time. 

Get in touch with us today to start your strategic planning for how to best enter the New York marijuana market.