I think that a great deal of money and resources flowing into the hemp and CBD space is focused on building or acquiring the hard assets that have the potential to generate revenue and often times the revenue generation plan developed for these assets is lacking altogether or poorly executed. I find that there are a lot of investors and operators that approach this space with the mindset of if we build it the buyer will come. I think that this was the case for the innovators and early adopters that were first to market but as more money and resources enter this space that mindset will cause problems. When you combine the fact that hemp is a very capital-intensive business with extreme regulatory inefficiency, if the plan to monetize the business is not sound and well-executed before the business becomes operational then the business will face significant challenges. Even a sound and well-executed plan to monetize a business will take time and resources and there is almost always an exponential growth curve for revenue generation across industries. It takes a significant amount of time to identify the target client, compete with whoever that target client is currently using for the goods or service, and build confidence in the brand or product being distributed. Given that the hemp and CBD market is in the early stages it is fractured from state to state and municipality to municipality with very few large players with significant market share. This forces companies to put more resources into client acquisition and once they acquire the clients they have to spend almost an equal amount of resources on servicing many accounts.
The Value Add of Sales as a Service:
Our time distributing goods and services across the hemp supply chain allows us to help companies expedite the growth curve associated with revenue generation in a few ways. We already have a strong rolodex of buyers across the hemp supply chain and we can provide the producers with data and insight on what niche their product serves and how to position their product. This also allows the producer to develop an efficient pricing strategy that ensures that they move through all of their available product while achieving cash flow positivity. We have seen countless producers price their products the wrong way because they are unaware of what their competition is offering and they feel as though they need to aggressively maximize profit for their business. This leaves a significant portion of their product unsold or sold at steep discounts as it approaches expiration and this is a significant drag on the business. Distributing products under our brand name also accelerates building trust with the buyer. We have been working with our buyers consistently and they understand our strict process for ensuring all of our products meet quality standards and are priced efficiently. Phoenix Distributors will turn away clients that do not produce within our acceptable quality standards or if we have a drastic disagreement on the pricing strategy. Retaining Phoenix's services is also significantly less expensive than internalizing sales with additional W2 employees. Given that the market is fractured between small operators they greatly appreciate these cost savings.
The Spin on Recruiting and Talent:
For the Individual:
I read more and more articles about talent migration out of mainstay industries due to technology as well as COVID. Just last week UBS announced plans to cut 7,000 jobs across Europe by 2030. As the hemp industry booms and becomes more mainstream there are going to be mass talent inflows. Given that the industry is so new these people may not have a good understanding of where they fit in the space or the opportunities that are available to them. Highlighting new and innovative ways the entrepreneurs are bringing value to the industry may help guide these individuals and hopefully, they will seek out your firm as a resource.
For the institution:
Most of the money flowing into cannabis has been from high net worth individuals as opposed to institutions. As Big Ag, CPG, Pharma, Tobacco, and private equity enter the space they are going to look for guidance. These institutions know the value of good talent and they will have the resources to pay for it. Educating them on something that they are not currently thinking about or overlooking could hopefully push them to your firm.
Written By Owner Of Phoenix Distributors - Chris Finelli