The biggest cannabis holiday is arguably 4/20, and it attracts everyone from regular users to those who only occasionally partake.
Cannapreneurs already know firsthand that organizing and making the most of such a large (and fun!) event is not a walk in the park. So why not learn from previous years and plan to make the 4/20 events of the future the best yet?
To make planning for 4/20 in 2023 just a little easier, I’ve gathered a few of the biggest lessons I’ve found for you. Let’s get started!
1. Begin with the Plan First
There is no such thing as planning too early because you can never be too prepared. You can start planning now, but six months in advance is a good place to begin.
A head start on planning will allow you to set objectives and maintain focus. Another benefit? Plenty of time to pivot your plan if anything goes to pot.
Additionally, you get plenty of time to build your sales plan and decide how this occasion plays into your business objectives. When you plan, consider points like your market, budget, and sales targets. Bring in your accounting services team on the planning to understand how money plays into the event.
2. Promote New Cannabis Products
4/20 means more sales for the cannabis industry. Even during the pandemic, some cannabusinesses saw gains of up to 50%! In 2021, both traffic and sales increased by around 10% year over year.
The results from 2022 are still coming in, but we anticipated 100% year-over-year growth. In addition, over the next six years we anticipate sales will continue to grow up to 28%.
There won’t be a sudden slowdown in this kind of growth. 90% of Americans support legalizing marijuana, and 25% now reside where cannabis is legal.
Despite the fact that 4/20 is significant for cannabis culture, the day of the week it occurs has a big impact on the celebration. In 2022, 4/20 fell on a Wednesday. Since many people are busy with life – work, school, and other appointments – it wasn’t an ideal day for the occasion. That’s why many dispensaries save the big events for the weekend, and perhaps you should, too.
In 2023, 4/20 falls on a Thursday, so you might want to consider planning your event and promotions for the weekend.
3. Make Sure Your Stock Meets Demand Have Adequate
Make sure you have enough supplies for the event when organizing your 4/20 promos. Companies lost over $600 billion in sales as a result of out-of-stock merchandise. Cannabis businesses typically report a 30–50% increase in sales for 4/20, so you’re leaving money on the table if you don’t have the inventory your customers demand
COVID-19’s effect on the supply chain has impacted restocking for cannabis businesses, and the days of keeping ‘just enough’ product on hand to meet your needs are long gone. The restocking principle to follow now is “if you can get it, you’d better get it,” until the supply chains normalize.
You could always make your life easier by having inventory management handled by professional accounting services!
Your Inventory Turnover Ratio (ITR) and Day Sales Inventory (DSI), will tell you how much inventory you have on hand and how frequently you should restock – that’s a good estimate for your needs. Here’s how to figure it out:
- Divide the total cost of your goods by the value of your inventory (example: $200,000/$40,000 = 5).
- ITR shows you need to restock an average of five times annually.
DSI tells you how many days it takes to sell your stock. Get this number with this formula:
- Divide 365 by your ITR (for example 365÷5=73).
- Now you know that you sell through your inventory every 73 days on average.
You do not want to lose revenue because you’re out-of-stock, so consider the projected exponential growth of the cannabis industry when you plan.
4. Know What To Do With That Extra Cash
The MORE Act may bring about a much-needed shift, but cannabusinesses currently have few banking choices. That’s why the cannabis sector is so dependent on cash, and why it goes without saying that your business needs to have procedures in place for handling cash. New to cash handling? Here are some quick tips:
- Keep a cash journal and accurately note “who, what, when, and how much” for each transaction.
- Two staff members should be present whenever money is moved.
- Limit access to cash and keeping it in a safe.
- Check registers at opening and closing, then reconcile them to the day’s sales.
Your cash flow is tracked by your cash handling methods. However, the best thing you can do to safeguard your finances is to invest in accounting services.
5. Leverage Your Accounting Team
Including your accounting team in your business plan will ensure that your strategy is logistically and financially successful. In fact, your accounting team is essential to the success of your company!
To keep you on the right path, your accounting staff can…
- monitor business performance and future projections
- ensure your books are on the up-and-up and that you are adhering to the necessary compliance and reporting standards
Accountants can also help start-up companies create a strong business plan in the first place – in addition to helping them grow.
Accounting services help with reporting on market analyses and showcasing the financial information that investors want to see before they back your business.
6. Just Enjoy The Day!
Have fun with 4/20 and take advantage of celebrating cannabis culture. It’s fun, and a little edgy. After all, you probably became a cannapreneur because you love it!
Make use of the occasion, and don’t throw away the chance to adjust your sales tactics and keep an eye on industry developments. Having a well-thought-out plan, appropriate timing, and the right tools can make a huge difference in terms of earning additional 4/20 money.
Remember to get your accountant on board to assist you with your growth. They have plenty of experience, and their advice can help you leverage your money in a way that will grow your company even further.
After working with several cannabusinesses and seeing a lot of “rights” and “wrongs”, your accountant has the know-how your business needs to thrive. And when it comes time to create — and execute — your plans, strategies, and procedures, you’ll profit from their expertise.
The longer you work together, the more effective you become, just like any team. Your accountant will learn more about your business with each passing quarter. They can produce future forecasts with these insights to help you make your future plans even better.
Want to increase your 4/20 sales for 2023? To find out where a higher level of accounting might lead you, get in touch with Accounting for Green.