The boom of the cannabis market in Colorado, Oregon, Washington, and Nevada can pose a few threats to many new businesses. When these markets become saturated, it can be difficult to position yourself among the competition and thrive. Fortunately, Tony Frischknecht has the episode just for you. With his four tips, he shares how you can best survive a saturated market. Tune into this episode to find out!
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The Four Best Ways To Survive In A Saturated Market
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What Is A Saturated Market?
I’m going to be sharing with you the four best ways to survive in a saturated market. I know this isn’t saturated markets. That doesn’t seem like there’s a lot. There are some out there. We’re not talking about some of the new ones that pass legislation in medical and recreational like Mississippi, South Dakota, Arizona, Montana, and New Jersey. These were all new markets for recreational course. Arizona and Montana, those both already have medical. There could be a little bit of this. I want to talk about saturation. How do know if you’re saturated? Places like Colorado, there’s a full system in place to get your licensing. These are developed systems. You’ll be able to tell. They’ll have a blueprint for you to get through the system. There’s not a whole lot of guessing that’s going on. However, when you’re first starting, you are going to see that in new markets, there’s not going to be a blueprint on, how do I start my business with the licensing process? Who do I talk to at the state? Who do I talk to at the city?
These are all things that are going to be coming out as they develop. If you are in one of these states, I think it’s incredible. I want you to take that time and cherish that you’re in the right timing of positioning. We’re not going to be discussing those now, but we’re going to be discussing markets such as Colorado, Oregon, Washington, and Nevada. California is coming up on that soon. You guys out there that are in the industry in these states, I would look at these as more of a developed state where they have these programs in place. What I’m going to be sharing with you are some valuable things. These are extremely valuable and they make good business sense. Not to drag this any further, we’ll get this going.Start creating business relationships and figure out how you can help each other out. Click To Tweet
One: Laying Down Your SOP
Standard Operating Procedures, SOPs they call them. These are things that can be overwhelming, especially when you’re in this crazy cannabis world that’s moving so fast. You want to access and understand these quickly. These are something that you’re going to take in. You’re going to be creating these procedures for anyone that is opening the store and the retail location in the morning for these days’ business. You don’t want to get too complicated. I try to keep things between 5 and 10 steps. There are going to be more steps, the bigger for the bigger positions. Start small. For example, when the employee comes in to open the door. He unlocks the door. He makes sure that there’s enough product on the shelves so that you’re able to sell to customers as they come in. Getting the store prepared for running at whatever time you open at 9:00 AM, “I’ve got to make sure I have these ten things done so that we can be productive as a retail location and keep the customers happy.”
I found that what works for me is recording. I take a video recording of the procedure. We’ll go to the example for the grows. Some of the grows, we’ve got clones that we have created over the 14 to 21-day period. There’s a process to creating those clones. First, we get the tray out. Second, we get the clippings. Third, we put those clippings into the soil, then we put water in there. There are many different ways to take this. I don’t want to get too confusing. You need a step-by-step process so that anybody that you bring into your organization can do that job, that position. You’re going to have positions. You’re going to have your store manager position. You’re going to have your bud tender position. You’re going to have your end of night procedure with cash. You’re going to have a cash procedure that needs to happen. You’re going to have somebody follow that.
What I’ve seen is people put a manager in place or they put an employee in place. What happens is that employee creates their own system and it can be great. This is the awesome part. It can be awesome. What can happen is if that person quits, who’s going to run with the procedures while nobody has procedures down? It becomes a cluster and you’ve got to start from scratch. Why not create this on your own either with your manager or somebody in that position? What I like to do is I record the steps to this process. I have found that simple for me only because I have trouble writing all these things down and keeping track of them without getting distracted. The best thing is to take a small position. Start there first. You can get more complicated the more comfortable you get with each position in the company. You’ve got this position place. Now, what do you do? You’ve got this recording. How am I going to take this to the next step?
There is some amazing software out there that you can take and edit this information with. One of my favorites is called Descript. It takes the video and it allows you to edit the video and edit the text. I’m going to try to explain this the best I can because I know this can get confusing. It allows you to go and edit the text, the verbiage that you have. It allows you to cut that out and it automatically cuts it out of the video too if you want to shorten it, reduce it or whatever. You upload it into this system. It allows you to do all your editing there. You can simply mark that out, print that out for somebody, and create a folder for that position. In a nutshell, that’s the best way to explain it. If you want to get more in-depth, you’ve got Google. Google does a lot for you. Google Standard Operating Procedures. You’ll see a ton of information come up there.
You’ve got that in place. This is also extremely useful if you’re going to hand over the operation. Let’s say you’ve got somebody that’s buying you out or somebody is going to purchase the business, they’re going to need to see this information. That’s how they can come in. You’ve created something that they have a playbook to. They can hand it to somebody else. They can get in and start right there. These are extremely important and many people forget about them. I want to touch on that.
Two: Create A Network Of Small Businesses
Number two, create a network of small businesses. There are a lot of little mom-and-pops. That would be 1, 2 store owners. A lot of these guys get together in association groups. You need to have this dialogue with them discussing. Start networking with these other businesses. These other businesses are in the same place you are. They’re worried about being overrun by the large multi-state operators and being crushed by pricing, and by their competitors. That old saying, “Power in numbers.” Start creating those relationships and figure out how you can help each other out. I know people will say, “It’s your competitor.” Yes, but it’s going to turn into a “you versus them” soon. You want to make sure you have your relationships together to be up to date on what’s happening around you. These guys will know that stuff, so strength in numbers, association groups.
There are some other people that are wanting to sell it to these multi-state state operators. Depending on how you are in business. I know I like to know what my competition is doing to a point they want to know what I’m doing. You can still be competitors and work together on a lot of things. Remember that. Don’t ever negate that out. I know it’s a competition but there are plenty of businesses. I promise you. There are plenty of people that are wanting to buy cannabis in all these markets. You’re not going to lose all your sales. You don’t have to share internal stuff. Share how you can compete against the bigger companies that are starting to be created.
Three: Bring Down Production Costs
Become more efficient. There are many things that can be done here. These are some of the few like bringing down your production costs. This is what it is being a business owner. Figuring these things out like the cost of this per gram and what it costs for you. You should know how much that costs you. If you don’t start working on that, then figure out how to reduce it. Labor. All the time in all the businesses that I’ve ever had, generally the most overhead is my labor overhead. Make sure you don’t have too many employees. If you’re creating more work, look at some of your great employees. You want to bring them out and say, “This is something I’m looking at doing.”
See if they’d be interested in helping out and being a part of this. We’re going to talk about the next step, but we’ll go further with that with employees. A lot of employees can do multiple jobs. We see it in many businesses. I know I did it going through up, but you are seeing it too. Your power consumption, this is again with efficiencies. Upgrading your lights, your cooling systems. What you’re going to have to do is reinvest in your company. I hope you’re doing it consistently, but you might have to take a majority of your profits. I would suggest you take if not all your profits for the first five years and re-invest them right into your company. It’s going to build a much stronger foundation for you. You’re not going to be able to take as much profit, but that’s okay. If you’re looking for the future and you want longevity, this is how you build it with a strong foundation.
Four: Happy Employee
The fourth one and one of the most important ones, that’s why I got it here on the last, is a happy employee. We’re starting to see this more and more with many businesses. It’s culture and community being created in the business that people want to be a part of. If you are able to create an environment for your employees to be excited to come to work, excited to work with the customer, excited to work with the plan, excited to work with their manager, what I’ve seen here is it’s going to be more challenging for competitors to knock you down because you have employees that love to be there. I don’t know how many times I’ve dealt with an employee of a retail store or restaurant that you could tell they hated being there, but they needed to be there because they were getting paid. That’s the only reason they were.
I’ve made this mistake in the past myself. I’ve gotten overwhelmed with what is happening in regulations. You forget about the people that are manning the store at the end of the day and the cash register. You want to build that trust in there. Have weekly meetings. Make them aware of sales that are happening. If you’ve got a retail store and a grow, make sure you have those separate. It’s always good at least once a month if you can get them all together. Everybody’s doing a lot of stuff on Zoom. You can create a virtual meeting to help keep that connection. You want to create that comradery. We’re a team. We’re a family and that’s what we’re building here.
Getting buy-in from discussing the company’s vision with everyone. You’re the leader of this company. It’s time to act like it. What do leaders do? They create a vision of what we want to bring. What has worked for me in the past is sitting down and figuring out what that vision is, talking to my managers. What kind of a place do they want to work at? What do they want to provide? This is going to take a few meetings to get, but once you come together and you can agree upon what the vision is, then that should be discussed constantly. Where are we going to be? Where do we need to be? Everybody needs to understand that and hear that all the time so that they know you as a company where you want to be. They will latch on and they’re going to become a part of the machine. It gets fun.
I’ve seen it in my own companies, but I’ve also seen it on large scales like Home Depot. I worked for Home Depot back a long time ago when I was in my early twenties. You would see this comradery. They would create bonuses and little perks for people. Even just like, “She sold most this week of product and we’re giving her a badge, or we’re giving her a little plaque. She sold 10,000 grams,” or something like that. These are little ideas that you can work on with your managers and say, “What would be fun?” We used to do a barbecue getting everybody together once a month. We get everybody together so that they can talk, relate to each other, break things down, and discuss what’s going on in the grow versus what’s going on in the retail. It gets fun. You get a lot of buy-in from that. People want to be a part of something positive and something growing. You may not see it all the time, and might be a couple of you in it. It’s your job to build that up.
Name 1 to 2 things that the employee is doing very well and some stuff that you can improve on at these meetings. These are questions you can ask. What can we improve on? That creates an engagement with you and your employees. They feel like, “I can make a difference and I can make something happen.” They can. That’s what you want to create. You want to get that involvement. How can we make the business better? These two questions right here will bring tons of engagement. You can discuss what you came up with the following week. You can also take it one step further and say, “Tom, you think that in order to do this, make our business better, you want to create more customer engagement. How can we do that? Tom, would you be willing to pair up with Sandy, Thomas, and Gerald to discuss how you can create more engagement?” You can get coffee for 30 minutes. Talk about how you can create some engagement, and then you’ll bring them together.
The next week, they can tell you, “We came up with this and that.” Some stuff you never even thought of. You guys can discuss it as a group and get everybody to be like, “This is the number one thing we want to do.” Create that engagement. Make them feel a part of it. This is where all these are going. This is a great way to start. You can expand as you get more comfortable and as you feel, but with that employee input, you start creating this organization and something that becomes an amazing company, not only it’s living and breathing. You want to get that happening as soon as possible if you haven’t already started yet. I know some of you are experts. This is your thing. You know what you’re doing. Keep doing what you’re doing and working in your business.As the leader of the company, you need to be working in your business, not on your business. Click To Tweet
The big winners that do this will continue to work in these areas. They will work on them constantly. You’ll see a lot of the big companies doing this. I know you don’t want to create a corporate environment stuff but these are some of the things that they use to create comradery and pushing the business forward. The great part about this is this isn’t you as the CEO or owner having to do all the work. You’re asking the questions and they’re putting it together. It can be fun. That will take that off your plate. You can tie your manager into it. They can start making the decisions and then bringing them to you when they finally want to do this, so you can then get your sign-off.
At the end of the day, if you’re making a better product, you’re reducing your overhead, and your employees are happy, the sky is the limit. You can grow. You don’t have to worry about people coming in and stealing your employees, or other companies because they are dedicated to you. That’s what makes you different. You want to set yourself apart. Creating a company where everyone has a say in the direction you are headed is an amazing feeling. Building a company like this isn’t easy, but it’s very rewarding. It’s also going to reach you a lot further than you try to do it by yourself or being a boss that yells at people. I’ve been a part of those companies and it’s not fun. You might get paid good money, but it is crappy at the end of the day when you’re working for somebody like that.
As the leader of the company, you need to be working in your business, not on your business. What I mean is you’re not sweeping up at the end of the day. You’re saying, “How can I get my place cleaner? How can I make this better?” Don’t get me wrong. I’m not saying you as the owner aren’t supposed to be touching the brooms because you should lead by example. That’s how people will see it. I know that’s silly. I want to preface this. There are some great books out there and I’m going to give you these names. They’re good examples of how to work on your business, not only that but how to create a great business that people want to be involved in. One of my favorites is The E-Myth by Michael E. Gerber. That’s an awesome book. It takes you out of a small business mindset or an employee mindset and puts you into the visionary scope, and how you can create a better business. That’s an awesome one so check that out.
There’s another one that’s awesome. It’s a long read but it’s called Built from Scratch by Bernie Marcus. This is the Home Depot story, which I worked at one when I was in my twenties. The amazing thing about this book is not only they talk about how to build and create employee buy-in and ownership mentality. These guys built a company that created a thousand millionaires that were also employees. It’s a great story. I urge you to check it out. Home Depot is an amazingly huge successful company. The great part about this is it’s maybe a long book but we live in a great time where you can listen and read on the go, or read a book at night before you go to bed. Both books are fantastic and follow some great principles. Please use them.
Lastly, someone told me a long time ago, “Take what you like and use it. The stuff you don’t like, leave it behind.” Everything that I’ve shared in this episode, I want you to take little pieces of it. It is not the perfect outline. However, these are some of the most important in my opinion. Please take that with a grain of salt and use what you like. That is your business as an entrepreneur. It’s to figure those things out. I’m here to maybe give you a format or something that you can work off of to make it a little easier at the end of the day. Thanks so much for joining me. It’s always a pleasure. Please hit the subscribe button. Let us know that you’re out there. Check out all my episodes on PlantProblem.com. We will see you next time. Thank you so much for joining us and have a wonderful day.