CBD (Cannabidiol) is all the rage these days. Many businesses, from coffee shops to grocery stores, have a variety of CBD products popping up on their shelves, from oils to infused baked goods. This industry, which is just beginning to gain steam, is poised to take the world by storm; and people are starting to notice. Anticipating a boom in demand and interest for CBD products, many people are eagerly considering getting in on the action by launching their own brand or business. Exciting and enticing as that may sound, it is far from easy. Before diving headfirst into the industry, you absolutely must consider four key factors: your investment capacity, your team of people, your target market and if you should look for outside expertise.
Let’s talk about the investment…
The thought of creating your own product and brand is exciting and may seem easy enough on a surface-level. However, although this industry is up-and-coming, it is already remarkably crowded. In order to stand out and rise to the top, you must invest in quality product development, branding, and compliance – and the price tag is extremely high. Your initial investments will include:
- Product Development – A top-notch product must first be formulated using high-quality ingredients from reputable sources. Then, the product must be manufactured. $10,000 to $15,000 to actually create your own formula, plus another $15,000 to $40,000 for the production of the product. White label a product or use one that the manufacturer already has to save yourself $10,000 to $20,000.
- Branding Development – When starting your CBD Brand, in order to stand out in the market, you must create a logo, a website, marketing material, mission/vision statements, content for the launch and ongoing promotion, etc. The investment in quality branding development is roughly $20,000 – $40,000.
- Compliance – To be a reputable brand, you must become compliant with industry standards and stay compliant. Unless you have a background in this industry, with a focus on the legal side, to begin as a compliant company is going to be a major investment let alone staying compliant as the industry evolves. Attorney fees could range from $5,000 to $10,000, but a reputable manufacturer should be able to help you navigate this and lower your cost to entry.
It is possible to save some money by working with a credible manufacturer who provides private/white labeling services.
This will reduce your initial product costs, as you don’t have to set up manufacturing but, even still, your cost to enter the CBD market will likely be around $30,000 – $50,000. That doesn’t even consider the ongoing expense after the product is launched in order to stay relevant.
At this stage, the investment is quite high, and more restrictions are made by state and local governments. It is important that you have a working knowledge of this industry. Work with a consultant along the way who has the experience to help you navigate launching your brand. If this investment seems too high, and you are truly passionate about helping people with CBD, the smartest move might be to find a company that resonates with your mission and vision for your brand. Many companies wholesale products at a rate where you can make a nice income, while still providing a great product.
Do you have a team or are you flying solo?
In order to create a successful original in starting your CBD brand, the initial investment has to be there no matter what. However, even if you have all the money in the world, your brand will quickly fail if you try to go it alone. The key to success is developing a tight-knit internal team. With strong strategic partnerships to help get you started and then stay afloat. You will need experienced people to help with manufacturing, sales, marketing, operations, legal, and various other components.
All of the parts can essentially be outsourced, but in order to grow, it is good to have internal people that help with sales, marketing, and operations. In the beginning, people might wear multiple hats, but the goal is to get people focused on specific areas. Along the way, you will need to create processes to allow people to seamlessly take over roles as you scale up.
Save yourself on the initial investment
Build a relationship with a manufacturer and search out legal counsel with a focus on the cannabis industry.
When it comes to your internal team, you have to ask yourself, “ Do I have dedicated people and partners?” If the answer is no, you need to figure out what it will take to make that a yes. If your answer is yes, that is a major box ticked in favor of getting started in the CBD Industry.
You won’t go anywhere if you don’t understand your target market.
Before you even get started on creating your own CBD brand, you must set your eyes on a specific market for your products. Think about it, are you targeting athletes? Fitness enthusiasts? Holistic practitioners? Elderly community? Or are you focusing on a specific ailment, or set issues that relate to one another?
Additional considerations for your target market:
- How do you reach said target market? Maybe through social media or taking an ad out in a newspaper, or perhaps you focus on building strong strategic partnerships.
- Is your customer base going to be national, local, or both?
- What types of products are your clients looking for and how will they use them?
- What are the attitudes, behaviors, and perceptions of your audience?
- Are you focusing on wholesale or retail?
Once you pinpoint your market, you must then craft your message. This includes your brand story which should create an image in people’s minds. What do you want people to think of when they hear and see your brand? What will your mission statement, vision statement, and core values say to someone when they interpret them on their own? It is crucial that your message is clear, concise, and compelling to ensure it resonates with your target audience.
Bringing it all full circle…
This information isn’t meant to scare you, but rather to duly inform you of the critical components in the development of your brand. In starting your CBD Brand, there are many ways you can get into this industry from creating your own product to distributing a product that you believe in. If you have a passion for helping people and want to be a part of this industry, let this information fuel you to take the next steps.