Expert Tips on How to Scale a CBD Business
Starting a business is achievable even on a shoestring budget, but scaling up is where the challenge truly begins. While a lower initial investment often means smaller turnovers and profits, many entrepreneurs are eager to expand once they have mastered the basics. If you are one of those business owners struggling to grow, these tips to scale your CBD business can help you achieve the level of success you envision. Remember, even giants like Google and Amazon started their journeys from humble garages—scaling takes persistence and the right strategies.
Scaling your CBD Business for Success in the CBD Market
First, one needs to understand that growth and scaling are two very different terms in business language. Growth is when a person increases business revenues through a proportionate amount of investment—in contrast, scaling means looking for ways to expand the business without a considerable increase in investment.
Growth is not that bad as it helps get a more significant share of the market and boosts brand value. However, as one can guess, scaling is the key to long-term success in any business.
The classical strategy for scaling is increasing the depth and width of the business. It primarily involves expanding to new geographies or markets (e.g., within the country or internationally), expanding the product portfolio with a particular focus on brand extension as it helps save costs, and considering new ways of communicating with clients (expanding promotional strategy).
However, experts at Harvard Business School recommend avoiding certain pitfalls like scaling too fast and too early, focusing on quantity and not quality, losing business focus, making all decisions, and being unable to delegate tasks.
Keeping Updated on the Changing CBD Laws & Regulations
One of the challenges for those looking to expand the business is the different CBD laws in various geographical locations, and more importantly, continually changing regulations.
The CBD market is a fast-growing market. However, it also means that it is not a mature market and lots of changes keep happening at a fast pace. Just take an example of the classification of CBD as a novel food by the EU. For those not ready for this law, it created considerable problems.
Additionally, when it comes to promoting products, laws also differ. For example, promoting CBD for pets in the UK may get any company into trouble. Moreover, laws regarding health claims are very different in the EU from the UK and the US.
Even within the EU, laws may differ. It is vital to understand that some countries may ban certain CBD products on health concerns, even if those products were legally produced in the EU.
Just take the example of vaping. There is a growing concern regarding health risks associated with it—the EU Commission is considering bringing CBD vapes under the Tobacco Regulation Act.
Choosing the Right Supply Partners
When looking to scale a business, one needs to find a supply partner with expertise in various CBD business areas, from providing private labeling, CBD wholesale, dropshipping, etc.
Since, in the long term, the focus should be on quality, and only quantity will follow, one should look for a wholesale supplier with excellent expertise in producing various CBD products from isolate to distillate. For example, it could be a good idea to consider water-soluble CBD isolate and distillate. In addition, CBD wholesale companies should also be able to provide equipment for in-house production and provide tech know-how.
CBD eCommerce: Selling CBD Online
For those new to eCommerce, there could be numerous ways of selling their products online. Nonetheless, all the online selling ways can be divided into two groups:
Selling through eCommerce platforms. It is the most straightforward way of selling CBD products. Platforms like Amazon are global. But then every European nation has other local major players like Otto and Zalando in Germany. The good thing about these platforms is that they are like a huge mall, and clients regularly come to them. On the downside, they may not allow sales of CBD in some countries, and there may be hassles of account approval. Further, they may take a considerable commission from sales.
Tips to scale your CBD business could not forget to include creating a dedicated CBD sales platform. This means setting up an online store using platforms like Shopify, WooCommerce, and more. These platforms offer unlimited options and manageable upfront costs, making it affordable to establish an online presence. The most significant advantage is ownership—you fully control your store without the risk of bans or commissions. However, visibility can be a challenge, as it's like opening a shop in an isolated location. To overcome this, substantial promotional efforts are essential. Use tools like social media platforms (Instagram, Facebook), Google Ads, and even local promotional channels in your target market to scale your CBD business effectively.
Product sourcing is another issue. There are multiple ways of product sourcing both for beginners and experienced players. It could be a CBD dropshipping business with practically no need to hold stock, but it also means a lack of sufficient control over the supply chain. Or buying CBD wholesale from private labelers, and finally, setting up your production.
Advice on Expanding Your CBD Product Portfolio
The CBD market is growing at a fast pace, with a CAGR of almost 30%. That is way higher than most industries. However, competition in CBD is also increasing fast. Nonetheless, CBD business opportunities are many.
Differentiation is the key to long-term success.
It is the basics of marketing. One should be able to differentiate the product from others. If it is just another CBD oil, that may be challenging to sell. Further, consumers must be able to understand that difference. There are many strategies for creating products that stand out.
Firstly, focus on value-added products. Days of simple CBD oil are long gone. Thus, develop a product with added health benefits. This doesn't mean increasing the concentration of CBD. But creating a unique product by adding terpenes, essential oils, and other cannabinoids to CBD oil. Doing so may help to make a product that is especially good for specific health conditions like calming nerves, promoting sleep, improving skin health, anti-aging, preventing headaches, and much more.
Another good way to scale things could be focusing on a special user group. Thus, one may come up with CBD products specifically for sportspeople or active lifestyles, women's health, topicals, cosmetics, and veterinary products, to name a few. It would be a good idea to provide a range of products that focus on one of these segments, rather than trying to expand with single or some sub-quality products in all these segments.
Tips for financing the business
Doubts that banks or other financial institutions may not finance the CBD business are unfounded. Banks finance legal business activities or legal entities in any given nation. Thus, a legal entity may apply for a business loan based on the business plan and apply for a loan for equipment purchase or equipment lease.
Of course, there are also microlenders, and they are generally more flexible. However, the interest rate of such lenders tends to be higher.
Indeed, there are other flexible ways of finding investment, like offering a stake in your business to various lenders. These could be friends, venture investors, angel investors, and much more. The only thing to remember is that most investors, be it institutional or angel investors, will ultimately look at a business plan that is realistic, doable, and flawless.
Summary
Scaling your CBD business may seem daunting, but with persistence and the right strategies, success is within reach. By implementing these tips to scale your CBD business, you can expand into new markets, diversify your product portfolio, and refine your operations to maximize profitability. Always prioritize quality, adapt to evolving regulations, and leverage modern marketing tools to stay competitive. Remember, with a clear vision and strategic action, scaling up can turn your CBD venture into a thriving enterprise.
About us
At Essentia Pura, we specialize in manufacturing high-quality white-label and private-label CBD products, helping businesses launch their own unique CBD brands. With cutting-edge hemp extraction methods and a commitment to compliance and quality, we support companies in the nutraceutical, pharmaceutical, and cosmetic industries. Whether you’re looking for ready-to-market formulations or custom solutions, we’re here to help you succeed in the growing CBD market.
