Evaluating Vendors in an Industry Powered by Startups
Updated: Nov 6, 2020
Even in its infancy, the cannabis industry is packed full of software solutions, financial services, and marketing services all on a mission to help streamline different facets of your operation. While having options is great, it can quickly become overwhelming. Upon receiving your cannabis license, or even after establishing the slightest interest in expanding your brand, you will undoubtedly be bombarded by emails and calls from vendors who can “help you do this”, or “help you do that”. Most of these services and solutions could have a positive impact on your business, but how do you determine which services you absolutely need versus which services are nice to have? More importantly, how do you determine which services best fit your operations?
3 Things You Must Do When Starting Your Evaluation:
1. Set your expectations and ask the right questions
Being a new industry, even the most mature services on the market are constantly learning, growing, and adapting. Keep in mind this is an industry run by startups. While there are some fantastic offerings on the market, and the industry has already come a long way, you're inevitably going to run into bugs, missing features, missing integrations, and more. Paying attention to the bells and whistles that come with a software subscription is important, but knowing the inefficiencies and shortcomings of that software is crucial. It's key to know how you want to operate your business, and whether or not the software you are evaluating can support your unique operation. You will likely be making a few sacrifices with your new software partners, but the software needs to fit you, not the other way around. Make sure you're asking the right questions. If there’s an SOP your business can’t live without, make sure to ask if the software you are evaluating can support this. Assuming certain features are table stakes at this stage in the industry can get you in trouble.
2. Understand market fit
Every state has different regulations, taxes, and reporting requirements….and just to keep us on our toes, these seem to be constantly changing. While your software partners can help automate many of your SOP’s around compliance, it is not recommended to 100% rely on these solutions to keep you compliant. Staying compliant is the responsibility of every member of your organization. Make sure you know what it means to be compliant in your market, and stay up to date with new regulations. Many services are a great fit for certain markets, but fall short in others. Simply knowing which services are fully compliant in which markets can effectively eliminate a large number of your available solutions.
3. Establish your budget and prioritize
Expenses add up quickly for any cannabis business owner, and successful businesses are always looking to reduce overhead. That being said, allocating too little to your software budget can come with a lot of pain, and further expenses down the road. A couple hundred a month can mean a world of difference in canna tech. Software D will have a lower price tag than Software A, but Software A will have a greater return on investment. Ripping and replacing software can also be very costly and time-consuming. The extra dollar on day one can go a long way. It's important to know how much you're sacrificing on things like performance, automation, and support by not going with Software A or B.
No cannabis business is exactly the same, and there will be things that are critical for your business that are not for others. This is why companies offering the same type of services often have different features. The time it takes to develop new features varies from company to company, but it’s never overnight. Pay attention to future promises and roadmaps, but buy on current state of the product.
There are many other considerations when evaluating software, and it's not easy to make the best decision without intimate knowledge of the industry and the services available. If you'd like to learn more, please contact us! All consultations are FREE of charge.