Starting any business can be a daunting task, whether you’re a newbie or a seasoned entrepreneur. Now take a fledgling, regulated industry like hemp, and it can seem even scarier. But the truth is that there’s no time like now to start a CBD business. The industry continues to grow at a rapid rate, and there are more opportunities than ever. In fact, because of how much market disruption COVID has created, you have more opportunity now than you did a year ago! By starting your CBD business now, you can also take advantage of a few years of regulation, experience, and dependability with your manufacturing partner. The industry is much less “flight by night” now that it has begun to mature. Let’s explore some of the best reasons to take the leap and start your CBD business this year.
The CBD industry continues to grow at a rapid rate
When the Federal Farm Bill came into law in 2018, it opened the floodgates for the CBD market. Increased regulation brought increased interest and sales. According to Nielsen Global, total 2019 CBD sales in the United States eclipsed $1.2 billion dollars. Global Market Insights predicts that exponential growth will continue through this decade, with the global cannabidiol market being worth $89 billion dollars by 2026. This is largely due to further regulation coming for manufacturers, but that’s a good thing. Increased regulation will serve to make more people comfortable with CBD products, driving market share ever higher. With this much growth on the table, you can be confident that you’re not too late to the game to make a difference.
COVID-19 has left people concerned about their health
A Yahoo study performed during the first peak of the coronavirus pandemic in 2020 indicated that ecommerce sales in the wellness industry grew 21.6% year over year. When you take into account stay-at-home orders, lockdowns, and mass layoffs, it’s pretty impressive that sales rose significantly for this category anyway. That speaks one notable effect of COVID-19: peoples’ renewed interest in their health and well-being. Together we’ve seen the rise of remote work, distance learning, and generally going out less. That this extends to shopping as well comes as no surprise.
Mastercard’s year end study for 2020 showed online sales growing 49% compared to 2019. They also noted that single day sales like Black Friday had decreased in favor of more consistent online shopping over the rest of the year.
The Brightfield group conducted a study and found that a whopping 49% of Millennial and Gen Z buyers expected to use more CBD than normal for the duration of the pandemic. The study attributes this increase to the need for customers to manage their anxiety, depression, and insomnia – all worse as a result of the pandemic.
Many publicly traded hemp and CBD companies reported better years than ever in 2020. Their success shows that interest in CBD is not waning, despite what naysayers want you to believe. What do these reports mean for you? If you’re starting your CBD business this year, having a business website is a smart move. You’ve got a better chance than ever at being found and followed!
Big opportunities in the CBD market
We’ve seen that customers who might have previously purchased in-store are now shopping online. And we know that many brick and mortar stores are either closed or operating at limited capacity. The unforeseen opportunities created by our “new normal” show that now is a great time to start your CBD business. With many physical stores unprepared to compete in a new digital space, you enter the market on more even footing, even if you haven’t been around as long.
As the market matures, there are many new product offerings. Four years ago you might have seen a company selling only oils. Nowadays, you can access a wide variety of products. Liquids, Capsules, Gummies, Pet Treats, Massage Oils, and a whole host of skincare products are now available. This gives you the flexibility to make yourself unique and best serve your target customers.
How to pick a CBD supplier
When you look for a manufacturer to partner with, it’s important to evaluate a few key criteria. There are many established manufactures, but not all of them have the same offerings. Ultimately you want to partner with the provider who fits your needs the most. Here are a few important criteria to keep in mind.
With so many CBD manufacturers in the market, it should come as no surprise that some are generalists, and some specialize. There are those who do only oils, or only skincare. And there are those who have a good mix of many products. It’s important to identify your target demographic and what products they are interested in. A manufacturer won’t be of much help to you if they don’t make what your clients want.
Many manufacturers offer a family of programs with different minimums and requirements, to suit businesses of all backgrounds and budgets. For examples, here at Beyond Botanicals we have a wholesale program with very low minimums. This is great for people just starting out, who don’t have the capital to launch their own brand yet. It’s a low-risk way to get involved in the industry and make your first sales while you save up to launch your own brand. As you grow, you can work your way into what manufacturers refer to as white label CBD or private label CBD programs.
If you aren’t familiar with the difference between white label and private label, here’s an easy introduction.
- White label programs involve pre-existing formulas and pre-packaged product that is ready to ship. There is minimal, if any, customization, but they’re fast and affordable.
- Private label programs involve custom products, whether that be changes to packaging, ingredients, CBD concentration, or more. These are almost always made to order.
The CBD industry is constantly changing and improving due to new regulations. You want to find a manufacturer who stays on top of this and does everything necessary to make sure your products are legal. This includes cleanliness of sourcing, third party testing, and even label design. If a supplier is only willing to give you in-house testing instead of testing performed by a third party lab, that should be an immediate red flag. Partners who go above and beyond to help with label design, making sure your designs are FDA compliant, are worth more than their weight in gold! Look for a CBD manufacturer with cGMP compliance, which means their manufacturing process is clean, efficient, and consistent. They should have certification from a regulatory body like the Department of Drug Control or Consumer Protection, as opposed to an independent industry body that usually holds them to the same standards for an additional membership fee to promote them.
Your partner should always have answers to regulatory questions, or be willing to get them if they don’t know off the top of their head. If you’re evaluating a potential manufacturing partner who deflects or ignores these questions, stay far away from them. The risk isn’t worth their advertised benefits.
Like any business, some people are just in it to make money. When you meet a potential partner, or your account manager, you should make sure that they are passionate about they work they’re doing. If this is just another sales call to them, they may not be there when you need them, or particularly willing to help when you’re in a tough spot. That is to say, don’t work with someone who just sees dollars signs. Work with someone who cares about your success!
It’s important to see passion in your CBD manufacturer, but you should feel the same way. Because you have so many options, this is an important decision to feel good about. If something doesn’t feel right about starting to work with a partner, keep looking! Your relationship with your manufacturer is important, and you want to be able to discuss matters openly and trustingly with them. You should feel good about the people AND the products. When you find a company where both are a good fit, you know you’re in the right place.
Ask For Help
There’s a lot to learn when you’re starting a new business. Your point of contact at the manufacturer should be a wealth of knowledge, willing to guide you toward success. Whether it’s a question about what product is appropriate to launch next, or how to interpret a test result, or even how to answer a difficult question from your customers, this is a partnership where you want to work with an expert. You should be able to trust in asking your CBD manufacturer to guide you through questions like these, instead of just brushing you off unless you’re giving them money. Having added value like this in your relationship can be the difference between an okay brand and a great one. Don’t settle for anything less than greatness – you’re worth it!
Have Good Communication
Finally, your manufacturing partner should be open and responsive. It always surprises us how many people tell us that their buying decisions were based simply on the first company they found that finally answered a phone call or an email. Your time is valuable, and you are deserve respect. Starting CBD company is no small task, and your manufacturing partner should feel the same way about you. You shouldn’t ever feel unimportant, or that you are an afterthought.
As you evaluate manufacturing partners, pay attention to how long they take to respond to your initial inquiry, how easy they are to get on the phone, and how quickly they follow up to your questions. If they’re not responsive to begin with, that’s a good indicator that things won’t get better. Conversely, someone who starts with an impressive approach is a lot more likely to be consistently available to you as you develop a working relationship.
If you’re interested in starting your own CBD brand, we’d love to speak to you about it. Beyond Botanicals can answer any questions you have, review where and how you will sell your product, and help you launch a brand that will become a dependable source of income for you for years to come.