How to Start a CBD Company: Business Starter Kit

In my experience over the years with multiple businesses in several different industries, I’ve run across several types of Entrepreneurs, each with their own personality traits.  Some good, some bad.  These aren’t formal types, just the names I call them.  However, the descriptions will surely remind you of someone.

The Visionary – The visionary has extremely high-level business concepts that with the right team over time can happen.  Visionaries become the Bill Gates of the world.  But they are not all Bill Gates.  There’s a large portion of visionaries that will never see a company developed enough for their skills to even matter.  Be careful of the visionary if he’s moving too fast and attempts to proceed with his plan prior to being ready.  Another common trait of a bad visionary entrepreneur is a growing verbal disrespect to another partner or employee which is usually the most valuable of the team such as the brains of the operations or marketing.  If you see a visionary feeling threatened and they start criticizing or verbally abusing the company’s most valuable member, run like the wind.  The company will not succeed.  Visionaries are more valuable to hire as a CEO once the company has been established.  Unless, of course, they are one of the great ones and you’ve chosen an amazing partner wisely. 

The Brains – The “brains” of the company is a person (or persons) that know how to execute the idea.  This person is vital.  Without the know-how or someone who can easily learn the “know-how”, a new startup company rarely gets off the ground.  Even if you decide to outsource almost every part of the business, you still need someone with an understanding of all the pieces to properly manage the outsourced tasks.  However, working with The Brain can be challenging sometimes.  When disagreements happen between two business partners, one of which being The Brain, it’s usually not one person’s fault.  The problem started long before when each of them formed their perception of what should happen without ever discussing different situations and how to handle them.  A few solutions for this and some tips when working with The Brain.  First, write a custom operating agreement prior to an official partnership.  In this agreement, define all possible problems that could arise and agree on a dispute resolution procedure.  Also define everything having to do with money.  Secondly, give The Brain some freedom to work.  But require that knowledge to be documented throughout the process.  That way, if something happens to that person, the know-how isn’t lost.  Lastly, provide support for The Brain by not overloading them with busy work, easily figured out tasks, and other work that another employee can handle.  Put their strengths to efficient use without taking advantage of their talents.

The Worker – Workers are essential, and a hard-working business partner is not always a bad thing.  Assessing your business partners skills and more importantly their potential to learn is the key when considering a Worker as a business partner.  They may have limited potential and in that case are not worthy of a partnership but would make a great employee.  So, when would you choose a skilled worker as a business partner?  Hard workers in a team environment do several things for a company.  First, they motivate everyone else to work hard.  They show employees that even the bosses aren’t afraid to get their hands dirty.  By itself, they is not enough though.  But it can be extremely valuable if you have a “worker” entrepreneur as a partner that loves to learn new things and has the potential to rise above being at worker someday.  For example, in management.  This type of partner is usually younger, extremely motivated to learn, and appreciates the opportunity to work with experienced entrepreneurs and learn.  They may not get the largest share of the company, but it may be worth giving them a smaller share to motivate them as part of a performance contract where their ownership happens at a certain milestone.  Plus, who better to run a division of the company down the road, than someone who’s actually done each of the positions he’ll potentially be overseeing.  This can be especially valuable, for example, in a manufacturing company.

The Connector – The connector goes by many names: the introducer, the link-master, and the man-about-town.  This person knows everyone, a social butterfly of sorts, and sees inflated value in introducing one person or business to another for a residual commission or a portion of a new business venture between all 3 parties.  This is one of the oldest types of entrepreneurships and is now a dinosaur.  Like ideas, introductions are not worth much.  At the most, a small one-time fee once some sort of deal has closed.  In the 80’s and early 90’s, people actually made money doing this.  But ever since this thing called Google came about, there is no value in one introduction or connecting two parties together.  Especially not a portion of your business by making them your business partner.  If you find yourself seeing value in one connection, you haven’t looked hard enough yourself and would be a fool to give away a piece of your pie for just an introduction.

The Investor – The investor is usually someone who wants their money to work for them.  As stated in the money section above, a good moneyman is there to support financially for the long haul pending milestones are achieved and doesn’t expect one contribution to pay for the rest of their life.  If all you’ll get from them is a one-time cash infusion, investigate other funding options such as a loan before you partner with this person.   Don’t get me wrong, The Investor is necessary to have but when choosing a money partner, find one that can agree on handling that portion of the company as a partner, not just some startup cash. 

One of the most important aspects of starting a successful CBD company is finding quality suppliers and building strong relationships with them. This will help ensure that you are getting high-quality products at a fair price, while also giving you access to the resources and support that you need to scale your business.  A supplier gives you what you need that goes into the products you’re selling.  Depending on your business model, a supplier could be someone who sells you other CBD Brands products for resale, a Private Label Hemp-derived product manufacturer making your branded CBD product line, an extractor selling you hemp extracts to make your products, or a food distributor selling you bulk ingredients to manufacture delta 8 gummies.  Here are some tips for working with suppliers as you build your CBD company:

1. Research Potential Suppliers in Advance. Before you begin working with any supplier, it’s important to carefully research their reputation and reliability. Order samples. Try and test the products yourself.  Start your orders out small and build up slowly showing growth and consistency for yourself and to test them.  This will help ensure that you are getting the quality and service that you need from your suppliers, while also minimizing potential risks as your business grows.
2. Build Trust with Your Suppliers. A key part of any successful supplier relationship is building trust and transparency. This can include being honest about your needs, communicating openly, and working closely with your suppliers to ensure that you are aligned on goals and expectations.
3. Do Not Haggle with them Every Time you speak. Everyone is working to make money. And if you’ve found quality CBD products or raw materials to make your own, then of course price is a factor.  However, you can’t expect your supplier to continuously lower their prices every time.  When buyers continuously try to reduce their supplier’s prices, there will be a point where the supplier is not making enough money to even bother taking your call.  What you’re essentially telling your supplier is that you don’t care if they make money, and you enjoy taking advantage of their kindness and forthcoming efforts to build a solid business relationship.  When you initially negotiate your first order, thank them.  Let them know you’ll be scaling up your operation and may need to visit this again once your volume reaches a certain point.  Increase your order size, then ask for a larger discount.  And if the market prices change before that time, back any further negotiations up with competitor pricing up as proof that prices in the market have changed. 
4. Focus on Quality over Price. If you focus your sourcing efforts on finding the best products instead of just the cheapest, you will make more money in the long run. Quality products equal repeat customers. If your business model excels with repeat customers, then focus on buying Quality hemp-derived CBD and THC products at a fair price, and success will follow. 

With these tips, you can build strong relationships with suppliers and confidently scale your CBD company as needed.