Ever since the legalization of cannabis nationwide, the market has been growing steadily. Just 15 days after the passage of the bill, Statistics Canada reported there was a total sale of cannabis worth about $43 million. As high as that is, it pales in comparison to the latest statistics reports; experts predicted the 2019 sales could be as high as $7.17 billion. This is not surprising as the daily need for cannabis increases by about 10 percent every month, and this is excluding recreational use. The Cannabis industry is by far one of the most profitable industries to invest in, and the possibilities are endless.
As an entrepreneur or a business person, if you are considering a cannabis business in Canada, it is important to know there are hidden expenses you need to factor in. There is more that goes into starting a successful cannabis business in Canada than just raising capital to purchase your first batch of products or opening up to run your services. If all bases aren't covered, the business could crumble before it even has a chance to grow.
The cannabis business is similar to any other business. That's why it’s important to treat it as one. In Canada, there are basically five aspects of the cannabis business you can venture into:
Irrespective of your business venture, be ready for license and processing fees. These are costs you need to factor in while calculating your total start-up capital if you want everything to run smoothly. The importance of a detailed plan when starting a business can't be overemphasized. A lot of entrepreneurs start a business with half-baked plans and inadequate preparations, which turn into unwanted losses.
Expenses for branding are one of the most important costs an entrepreneur needs to consider when starting a cannabis business, especially in Canada. The Canadian cannabis industry is a fast-growing industry, and like all profitable industries in the country, it's filled with a lot of business entities and brands. Branding is going to be paramount for anyone just entering the industry. When you come on board, it’s important you stand out from the crowd and showcase how and why you’re better than your competitors. Make sure your logo and business cards are professionally designed.
To appear professional, your branding shouldn’t stop there. It’s important to also design your receipts and invoices. Don’t forget to leave some room in your budget to manage your customer service because your reputation is also part of your brand. Having a professional phone system, whether automated or human, allowing your customers to contact you in case of inquiries, complaints, suggestions, etc., should also be factored into your branding expenses. A general mistake a lot of business owners make is assuming their personal phone line is a good substitute for a business line. Don’t make that mistake. Create a clear difference between personal and business affairs.
A fully functional website is vital to the success of a cannabis business in Canada. Once again, it's surprising that these costs are not properly accounted for in most Entrepreneur’s start-up calculations. To give you an idea of how big e-commerce is in Canada, we checked with Statistics Canada. Reports in 2018 show that e-commerce retail trade accrued close to C$1.6 billion and is expected to reach about 55 billion Canadian dollars in 2023.
Behind every successful Canadian cannabis business is an extensive amount of market research. The importance of market research to the growth and expansion of your cannabis business is invaluable.
A lot of entrepreneurs in the world today neglect insurance. Most feel it's a waste of money until the unexpected happens, and then they’re left with nothing but regret and self-loathing. Insurance is your safety hatch in case anything goes wrong down the road. There are different types of insurance available. For instance, liability insurance protects your company from liability claims, such as an employee who sues the establishment for negligence, harassment, etc. It’s a good idea to consult an insurance broker so you’re informed about your options.
There’s a saying "the only two things sure in life are taxes and death," and this can't be emphasized enough. All Canadian Cannabis business owners have to fully understand the concept of taxes. Most entrepreneurs will consider getting a professional to properly handle all taxes — which is yet again another hidden expense. Professional advice helps you avoid paying unnecessary fees and wisely cut costs and save your money.
No list regarding the hidden expenses of a successful Canadian cannabis business would be complete without including the costs for legal advice. An entrepreneur's best friend is his lawyer. The contributions of a legal adviser to the success of a business are enormous. A legal adviser will help you determine the best way to go about your company business structure, registration, insurance, correctly file your taxes, avoid unnecessary fees, and also help you navigate the best deals to close and those to avoid.
Some areas you might need legal advice are:
The journey to owning a successful Cannabis business in Canada is a long one, and only those who enter the game with adequate and smart plans can stand the numerous tests that'll come your way and help you cross to the other side. Running a successful cannabis business in Canada comes with a lot of hidden expenses that shouldn't be ignored if you truly want your business to be a success.
23 days ago