9 Money-Saving Tips for Starting Your Own CBD Company
It's easy to see the potential in the booming CBD industry. It's building a successful brand in a crowded marketplace that's the hard part. Launching my own CBD brand, I've learned a lot through trial and error. While these tips won't guarantee your success, hopefully they will help you avoid common pitfalls and put you on the road to a quick and efficient launch.
1. Grow your knowledge
Really understanding CBD is the first step to growing a successful brand. For me, it started with a series of Google searches, learning everything we could about CBD: its benefits, its history, its different extraction processes, and more. Next, we spoke to many experts and other companies in the field. It took us two months of research before we knew enough about the product to secure a supplier. This empowered us to make informed decisions as we went forward.
We encourage anyone new to the CBD industry to read our Ultimate CBD guide. This guide contains accurate information on CBD, its history, its production, and its health benefits. It's a great first step to expanding your knowledge.
2. Take a step forward
If you're truly interested in building your own CBD business, you need to get started. We've spoken to so many people who hold themselves back, pouring time into analyzing the business and trying to make every decision perfect. As a result, they never do anything.
Don't let perfectionism keep you from moving forward. You do need some knowledge (see above), but you don't need to know so absolutely everything there is to know. Get your product to the market. You'll learn most of what you need to know as you go.
3. Choose your name wisely
What you name your CBD business will have a huge impact on your ability to move forward. The unfortunate reality these days is that banks don't want to work with someone selling CBD. If your business name includes the words "CBD," "hemp," "cannabis," or any other overt reference to CBD, a bank is likely to tell you to take your business elsewhere.
Choose a name that won't raise red flags and that you can easily expand upon. Who knows what your business will look like in five or 10 years. We chose "Joy Organics" because it was simple, easy to remember, and easy to spell. It also expands easily into other product areas, including those that have nothing to do with CBD.
A final note: If you come up with the perfect name but find that the website is unavailable, you may not be out of luck. If the website is owned but not in use, contact the owner to see if they are willing to sell. It's worth the expense for the right name.
4. Establish your LLC
Set up your LLC as soon as you have your name. This doesn't need to be an expensive or intimidating process. We used Legal Zoom to set up ours. It was the least expensive option and took less than 20 minutes. Our application went in immediately, and we had our employer ID number in about 10 days. There was certainly no need to pay an exorbitant amount for this step.
5. Design your logo
With so many options out there, this step is easy and doesn't have to cost a fortune. Online marketplaces such as Fivver or 99 Designs provide the services of hundreds of freelance designers. We went with 99 Designs. The service lets you set your own price, then you'll receive samples from designers all over the world. You narrow the results down to the logo you like the best. This process takes about three to five days but can be more expensive than Fivver.
6. Design your website
Another area where new businesses can get bogged down is website design. There's no need to create a new website from scratch. Get on Google and search for templates. Use free or inexpensive services such as WordPress, Squarespace, or Wix. Find a designer who can take that template and fill it with content and images.
An important note for this step: CBD businesses currently cannot use Shopify for their shopping cart. We recommend using WooCommerce instead.
7. Choose the right partner
This is one of the most important decisions you'll make when starting your CBD business. In our brick and mortar store, 50 percent of all of our traffic is return customers. Our second source of traffic is referrals. Why? Because people love the results they get, so they come back for more.
The best way to go out of business is to offer a product that doesn't work. Your brand will grow when people keep rebuying.
8. Find a reputable CBD processor
The most stressful part of opening Joy Organics was arranging our merchant account. There is an astonishingly small number of banks in the U.S. that process CBD sales. The industry is full of theft right now: People will tell you one thing and then turn around and do another. You have to be careful to avoid getting scammed.
And you can't just use Square or another popular processing company: They won't do CBD sales. Instead, you'll have to find a processor that specifically does CBD processing. What's more, you'll need to find a US-based processor.
If you try a processor who is based offshore (the UK, Mexico, and Asia are popular locations), you'll find about 30 percent of your sales will be declined. Half of those customers will call their credit card company, say it's not fraud, and not return to complete their purchase. The other 15 percent are lost sales. What's more, every one of your customers will be hit with a foreign transaction fee. Nothing about this situation builds a good relationship.
9. Start with popular products
While it's tempting to think about creating your own unique formulas, don't fall into that trap. In our experience, these sorts of products don't get to market. Stick to the products that sell the best.
Right now, tinctures are the most popular type of CBD products. The second are softgels. These two areas are a great place to start. Remember: Your goal right now is to get to market. Once you're established you can start experimenting with less tried-and-true products