Don’t Chase Bad Money:
Unfortunately, I learned this lesson several times. But it is such an important principle to understand. I had an account many years ago that purchased bulk flower from me on a monthly basis. He would place large orders and pay a small amount of the total upon arrival and the rest was consignment. As time went on, he paid less on arrival and didn’t even clear out the prior order when the new one was delivered. So why would I continue to bring him more product? Because he was a cash cow and I wanted to keep the gravy train going. I knew if I cut him off, there would be a large balance that he would be unable to pay. In short, it was my greed. I kept chasing this account’s bad money. Eventually I stopped selling him product and had to try to collect as much as I could from him. In the end, there was a large unpaid balance that I could never collect. I got ahead of myself and allowed the balance to get too high. Taking a small loss early is much better than a huge loss down the road. Greed clouded my judgement and discipline. When dealing with net accounts, it’s critical to start small and monitor them closely. Never leave new product with a net account unless their prior order is cleared out. This seems like common sense, but it’s very easy to fall for stories and excuses when your judgement is clouded by greed. The best way to avoid or at least minimize any collections issues is to put in place S.O.P’s that you adhere to no matter what. You might come across a busy retail store that wants to carry your product on net terms. You are excited that they want your products and they even want to place a large order. Great news right? No. Fight the temptation and explain for all new accounts you have a maximum first order quantity per SKU. It’s ironic because many brands will have an order minimum because they want to make sure the order will cover the costs of the driver, and gas, and promo products, etc.. I have learned that the better play is to start small, see how things move, and then increase the order size, if necessary, based on their results. Never chase bad money. You want to sell cannabis, not run a collections agency.
Everybody is chasing trends:
This is a new industry so there are a lot of uncertainties. There are also lots of new brands and companies that don’t understand the culture, history, or even the flower itself. So they chase trends because they think that’s what will succeed. Trends fade away as fast as they came. Your business needs to be built on solid principles and values that are bigger than any trend. Quality, consistency, value, transparency, respect. These are the foundations of a successful business in cannabis and I would imagine any industry. Brands need to understand, respect and incorporate the history and culture of cannabis into their company and products. Many new brands were targeting the “new user” or “soccer Mom”. So they created discreet products that were very low potency and disregarded the particular strains. They almost tried to make you forget it was actually cannabis instead of celebrating the fact. The biggest and most successful brands respect and celebrate the culture of cannabis, the growers, the genetics behind the strains and the history of the industry. To prove this point, all you have to do is look at the success of Cookies, Stizzy, 710 Labs, Jungle Boys, or True Classic OG.
Patience:
This is a seasonal business and prices fluctuate wildly based on the time of year as well as market conditions. It’s not just about what you do, it’s about when you do it. Be patient and wait for prices to drop before making a large bulk flower purchase. For example, don’t buy indoor flower right before a large light dep harvest drops. Once the light deps flood the market, the indoor pricing will come down as well. You don’t want to have to liquidate all your bulk flower at a loss because you were impatient. Even with a brand, don’t rush things. Build slowly and organically. It’s critical to make sure your production, packaging, sales, and distribution teams are all lined up and ready for growth. If you push sales too hard before the other elements are fully prepared, you will not be able to deliver. Time is your friend. Use it wisely rather than trying to outpace it. A tree cannot rush to try to reach a certain height by a specific date. It just grows and grows, slow and steady. It does not waste energy analyzing or attempting to speed up its growth. It just keeps growing. That is the key to success.
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