Challenges are part and parcel of the very existence of startups, whether it sells CBD, cannabis, or any other product or service for that matter. In a world where 50 million new startups emerge every year, it takes a lot more to survive than just the right idea, good intentions, and copious amounts of enthusiasm. It’s true that stability and continuous growth are the ultimate goals of startups during the early years. But to get there, they have to grapple with tidal waves of change that play havoc with the established notions and the very basics of managing a business.
It’s not just the paradigm shifts in the market that keep entrepreneurs on their toes and lead them to second guess every decision they make. Startups are also facing mounting challenges pertaining to the day-to-day running of the business while trying to keep the customers happy and the workforce in good shape.
Just because you’re in a new and emerging “controversial” industry, doesn’t mean that you shouldn’t protect yourself from the general risks associated with any business, whether cannabis-related or not.
Competition, Cyberattacks, and Lawsuits
Competition is not an alien concept in the business world. Startups are no exception. When two or more startups target the same slice of the market or the same niche, competition is inevitable. This is more obvious where the market is saturated with startups. A case in point is California, which alone accounts for 19 percent of the total number of startups in the United States. Throughout the California area, Oakland-based startups, in particular, are in a unique position, business-wise. While they enjoy great opportunities in terms of growth, a vibrant market, and business-friendly legislation (legalization of cannabis included!) they also have to put up with a high dose of healthy competition.
Not that competition as a challenge is a bad thing in or of itself. If handled right, competition can trigger business growth and promote success. A good way to handle the competition is to research the market, understand the needs of the customers, and be ready to adjust the business and change direction to keep up with a shifting market.
And then there are hackers who target startups more than other business entities. Their goal is to infiltrate the network and either steal the data and research or literally hold the business operations for ransom. Cyberattacks are disruptive and the damage they cause to the startup can be hard to recover from. Every startup should take cybersecurity seriously and set aside resources to maintain a sound security strategy and keep it up to date.
If cyberattacks are sneaky and take place in the shadows, lawsuits are more upfront and aggressive in their approach. for example, cannabis startups get into legal troubles, not necessarily because they break the law or cannot adhere to business regulations. More often than not, they fail to protect their own intellectual properties or infringe on those they have no right to. This results in protracted legal battles that drain the resources of the startup.
To stave off potential costly court cases, the entrepreneur needs to understand the laws and regulations that govern their niche and industry. If the startup cannot retain a lawyer on a permanent basis, it should at least run all agreements and NDAs past legal experts before signing on them.
Managing People and Finances
While hiring and firing are at the heart of the inner workings of every startup, managing the workforce is usually a more complex process. It’s one thing to find the right talent, but to make the most out of that talent and keep them happy and loyal to the company is a different ball game. Moreover, many of the early hires in the life of a startup could turn into co-founding partners. Those talents would need to put on different hats and assume many roles that contribute to the overall success of the company, not just limit their time and skills to their specific department.
Not all entrepreneurs are finance-savvy. A shortcoming that has to be dealt with early on. The finances of the startup have to be planned well in advance, even before the company has become a legal entity. That financial plan is not set in stone. It should be flexible enough to tolerate the ups and downs of the market and any unforeseen financial difficulties that might arise.
Financial management involves setting manageable financial goals and laying a reasonable path and a timeframe to achieve them. It also requires keeping financial records with the help of affordable software or a less affordable bookkeeper. By keeping track of its revenue and expenditure, the startup will be in a good position to take calculated risks, secure suitable investments, and foresee financial difficulties on the horizon.
More than ever, startups have to handle a litany of challenges and adapt to a changing business world. Each challenge requires a different skill set. Above all, the entrepreneur has to be resilient and proactive in their approach. With good planning, many of these challenges can become less of a hurdle and more of a springboard to business growth and prosperity.