March 3, 2015

David Miner, CEO Cannabiz Trusted Advisors, LLC www.cannabizsuccess.com

 

“…Seems we just got started and before you know it, comes the time we have to say, ‘So long.’”

– Carol Burnett (Actress/Singer)

And ‘So long.’ is just what we’ll be saying to many in the Cannabis Industry as we move forward. Although national prohibition is currently acting as a shield, of sorts, discouraging most big businesses from entering the space, there is still a significant uptick in M&A (Mergers and Acquisitions) and consolidation in general in the maturing marijuana marketplace.  This is natural for any maturing market, but it signals that for many we have come to a crossroads and it’s time to make some big decisions.

Will your business still be around in 2016? How about 2017?

As a Cannabusiness Owner or Executive, here are three questions you should be asking:

  1. Does my business have a competitive advantage? How have I distinguished myself among my competitors?
  1. Can we compete? What are my costs and prices compared to my competitors? Have we conducted a SWOT Analysis to drive out our Strengths, Weaknesses, Opportunities and Threats?
  1. Do we have an exit strategy built into our business plan? (Hell, do we have a business plan? And, if we do, are we executing our plan or is it collecting dust?)

If you can answer these three questions with confidence, you should welcome the consolidation that the maturing marijuana market has in store because you will not only survive, but you will thrive in the new, more competitive business landscape.

Let’s take a look at each of these three points in more detail. First, competitive advantage…

Competitive Advantage:

It is vital to your success as a business to ensure that you have a unique point of difference from your competitors. Wikipedia defines it like this: “Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors.” (Wikipedia, 2013)

To drive home the point of competitive advantage, please see the following list of well-known companies and their respective competitive advantage:

Wal-Mart = Price Tiffany = Exclusivity Marriott = Customer Service
FedEx = Reliability Amazon (Prime) = Speed Apple = Innovation

 

So, what makes your company different from your competitors? Why do your customers choose you? Have you ever asked them? This is a good, inexpensive place to start – include a quick 1-3 question verbal survey at the register to get that direct customer feedback. Have your salespeople submit the answers so you can tally them up. Once your customers have weighed in, analyze their responses and communicate the results to all stakeholders in your company.

If you already know what your competitive advantage is (or what you want it to be), there are some other questions you can ask, such as: Do my employees know our competitive advantage? Am I spending my marketing dollars wisely, based on my competitive advantage? Is my competitive advantage a focal point in our decision making as a company with regards to vendors, employees, customers, etc.?

Be creative and take a look at what you do better than anyone else in your niche and why. Determine what attributes make your business unique and what you will compete on. Once you have a distinct competitive advantage, you become a formidable rival, perhaps even a takeover target for a larger company – not such a bad way to go! If you do it right, it can even open up opportunities to brand nationally and/or franchise. Either way, you are in the driver seat!

To answer the question, “Can we compete?”

Stay tuned for Part 2 of my 3 Part Series on Consolidation in the Cannabis Industry.

The author may be reached at dminer@cannabizsuccess.com or by phone at 619-631-8420.