An overview of costs associated with starting your own CBD company.
Launching a CBD business (LINK TO POST ON STARTING CBD BUSINESS) requires meticulous financial planning! This means creating a thorough breakdown of costs to determine how much money you’ll need to get your start-up off the ground.
Here at oHHo, we know this process all too well. To help you gain a basic understanding of what it takes to launch a CBD business, we’re weighing in on essential costs, money-saving tips and funding.
What it costs to start a CBD business
It’s been said that CBD entrepreneurs should expect to invest upwards of $70,000; but this is a subjective estimate! Depending on your goals and the scale of your business, an investment in the six to seven figure range might be more realistic.
A glance at some of the heftier costs:
- License fee: Some states require a license to sell CBD, which can cost between $25,000 to $500,000.
- Legal fees: Compliance is crucial, so you’ll need to consult with a lawyer. Hourly fees can climb up to $300+.
- Production: If you plan on outsourcing cultivation, some experts suggest the minimum investment is $25,000. The cost of running your own grow operation would be exponentially higher.
Saving money to maximize revenue
The old adage, “you need to spend money to make money”, is spot-on—but there are ways you can keep your costs as lean as possible to increase earnings!
For example, instead of hiring full-time employees right off the bat, work with skilled freelancers. Another option: operate as an eCommerce business, rather than a brick and mortar store. Statistics show that 66% of CBD sales in 2020 were online. This approach would allow you to save on rent, staff, utilities, and then some!
Seeking funding for your CBD business
Here comes the frustrating part: Financial service providers still consider CBD businesses “high-risk”, making it extra difficult to snag a loan. However, new legislation (LINK TO POST ON STARTING CBD BUSINESS) might change that.
While we wait with bated breath, there are some other avenues worth exploring! An angel investor is a wealthy individual who provides financial backing for small businesses. Present them with a stellar business plan, focusing on how they’d benefit.
You can even scale back your plans and start small. For instance, refrain from buying a high volume of inventory; put a modest amount of money into a few stand-out products you know will make an impact.
So, how much money does it take to start a CBD business?
Well, there isn’t a set dollar amount… but it’s definitely up there! Ultimately, a deep-dive into all costs will help you establish a strong foundation for sustainable success.