When first getting into the cannabis industry, many would-be operators grossly underestimate the time, money, and energy required to get their business off the ground. For those without the resources to start from scratch, cannabis investments provide a sound way to break into the industry. Whether you’d prefer a hands-on or a hands-off approach, there’s an investment opportunity for you. As long as due diligence is done properly, you can have a strong entry into cannabis.
Two crucial aspects of any investment, due diligence and SWOT tell you everything you need to know before getting involved with a cannabis business. Armed with this information, you can make the investment decision that will yield the best results for your personal goals.
Here’s everything you need to know about due diligence, SWOT, and your cannabis investments.
Get the Most Out of Your Cannabis Investments
The cannabis industry is already volatile and risky, so investors should conduct business accordingly. Consider partnering with someone already involved with cannabis who can help you make informed and responsible investments. Having this insider knowledge and experience will allow you to mitigate risk while maximizing profitability.
Furthermore, working with seasoned industry professionals sets you and your investment up for success. Experts who’ve been down in the dirt — not just warming the bench — understand the ins and outs of cannabis businesses as well as how to make them thrive.
For example, at Higher Yields Cannabis Consulting, there’s almost nothing we haven’t seen. Across our team of handpicked professionals, we have decades of combined expertise. Our experience enables us to deftly navigate risk, avoid common pitfalls, and identify and fill market gaps in the most efficient way possible. We understand that your vision is unique, so we work tirelessly to ensure fiscal responsibility without compromising your individuality.
Performing Due Diligence
Arguably the most important step in making successful cannabis investments, due diligence involves intensive research and analysis to determine whether or not an investment is viable. With due diligence, it’s about the destination, not the journey, so always start by identifying your endpoint. Understand what your business goals are and go from there.
The old real estate adage “location, location, location” holds true for cannabis. Keeping your endpoint in mind, evaluate locations that support your goals. If you’re looking at a dispensary, you’ll want a location that provides the best customer experience as well as foot traffic. Consider things like parking availability, visibility — for marketing and security purposes — and neighboring businesses.
Additionally, doing a market analysis allows you to peel back the layers and explore the specifics of the local market. Identifying gaps and sweet spots allows investors to see a potential investment that could be a more profitable option.
Understanding local and state regulations is crucial for compliance. Similarly, analyzing enforcement history can show you how consistently authorities enforce these regulations and whether or not they enforce them at all. In spite of enforcement patterns, though, always make sure your operation stays compliant.
Using SWOT for Cannabis Investments
Whereas due diligence looks outward, SWOT analyses look inward. Standing for Strengths, Weaknesses, Opportunities, and Threats, SWOT gives you a look at where a business is making money, where it isn’t, and where it could be. Looking at the team, business, investors, and overall operation, a SWOT analysis involves:
- Areas of strength that can be leveraged for further profitability.
- Weaknesses within the corporate structure, team, or investors.
- Opportunities to fill gaps in the market to get an edge over the competition.
- Internal threats like tax problems, debt, or compliance issues.
A SWOT analysis is a good way to gauge an operation’s internal viability. When done in concert with due diligence, SWOT helps paint the bigger picture and determine which businesses would be profitable cannabis investments.
Putting It All Together
Properly evaluating potential cannabis investments tells investors how they need to be involved in order to make the operation successful. Whether more time, money, or other resources are needed is something that due diligence and SWOT will reveal.
Working with experienced consultants brings a certain degree of expertise to the table. Knowing the ins and outs of the cannabis industry, seasoned professionals can help you get the most out of your investments.
Interested in making successful cannabis investments? Contact us to get started!