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The Kaya Cast podcast is a weekly show where we interview thought leaders in the cannabis industry about their experience and expertise of working with cannabis. The aim of the show is to help cannabis retailers do what they love and share their stories.
Tommy: Why do some businesses fail? Have you ever asked yourself this question? Why is it that you can have two entrepreneurs with the same amount of experience, same amount of resources, capital, start their business at the same time and come up with drastically different results. I've had the opportunity to work with thousands of entrepreneurs, and what I've seen is the survival of the business, whether or not the entrepreneur can get their business past the survival stage rests upon really two key factors. How effective is capital deployed, and how effective are the entrepreneurs that are leveraging their time?
Intro: Welcome to the KayaCast, the podcast for cannabis businesses looking to launch, grow, and scale their operations. Each week, we bring you interviews with industry experts and successful retailers, plus practical tips and strategies to help you succeed in the fast growing cannabis industry.
Tommy: In the tech space, we have a concept called MVP: minimum viable product. Essentially, what is the minimum amount of capital you need to spend to create a product that solves a problem somebody's willing to pay money for. What you're trying to find is product market fit.
And this concept doesn't exist in retail, but the fundamentals remain the same. What is the minimum of cash needed before you can start making sales? Steve Jobs has an amazing saying that really ties into why businesses succeed or fail. He said people have a disease. They believe that an idea is worth 90% of the outcome, but it's really only a fraction of what makes up success. There's a ton of craftsmanship, pivoting, learning, failing to get an idea successful. What he's referring to is the number one principle in business: that your journey to success is marred by failure and mistakes.
And you really learn your way to becoming successful. And this is so relevant, especially if you're a first-time retailer. So let's say you raise a million dollars. How much of that money to you have left on opening day? You have an idea that once your doors open, customers will come. But what if sales do not meet expectations, are you set up to survive? The biggest mistake that first-time retailers make. Is overspending. Spending way too much on the build-out getting a location that's too big, too expensive and spending precious capital early on, on things that may not matter.
I was talking to a friend that was solving a churn problem. He had no idea why his business started churning customers. He grew his business to where it is, and all of a sudden customers were leaving. He would attract new customers and increase sales and that same amount of customers that were new to his business would leave his business.
He couldn't figure it out. So I asked them, have you spoken to any of your customers? You have all this data, have to marry the data that you have with the customers that you talk to. So he did, and what he found was really insightful.
He was not staying true to his brand promise. His brand promise is we're going to give you high quality stuff: product, at an affordable price. So every single skew that you buy from us, every single item that we have in our inventory is going to be good quality. We're not going to carry quads, right.
Or top shelf stuff. But everything that you buy from us will be good quality at affordable prices. And he was staying away from that. He's slowly, slowly, slowly brought in inventory that wasn't true to this brand promise. He also found out that his delivery was slipping, that customers were waiting too long for their product. And it delivery times was not meeting with what their expectations were. So customers left. And he went back, made a couple changes to his business and lo and behold churn started dropping. Paul Graham, a very successful venture capitalist. Who's invested in. Billion dollar businesses. Has a really great saying, he said, talk to your customers, whatever problem that you have, that you're trying to solve your customers have the answer.
If you have an advertising problem, talk to your customers, you have a sales problem, talk to your customers. If you have a churn problem or if you're trying to implement a new process, talk to your customers, they know everything. And I think one of the biggest mistakes that businesses make that entrepreneurs make. Is not talking to their customers enough.
If you're in the back doing inventory and you're never in the front, you're missing out on one of the. Crucial parts. Of running a successful business. Some of the questions that, that you can ask customers can be so insightful. Why did you choose shopping here? How did you find us?
When do you fit us in your day?
Do you come here before work? You come here after work during work. Do you live close by? Do you work close by? Is there anything that you'd like to consume that we don't have? That's really good because it'll tell you whether or not they're going elsewhere. Well, when was the last time you bought something that you didn't like here? Why. Well, when was the last time you had a bad experience here and it could be anything, it could be a way too long. It could be. You know, your AC wasn't on, et cetera. When was the last time you had a bad experience here? They have, they're not a part of your loyalty program. Ask him why aren't you part of our loyalty program. If they are a part of loyalty, ask him what can we do to make our loyalty more engaging? Can you give us some feedback? Is there anything that we should offer, et cetera? If you had the answers to these questions, think about how it would change your understanding of your business. You would probably be able to deploy capital so much more efficiently, and you would have an understanding of what areas in your business that you should. Allocate more resources to. It's such a shame when I talked to entrepreneurs and. They don't have a formal game plan on talking to their customers, getting real world feedback on the people that are coming to their business and exchanging their hard earned money for their product. What your customers tell you is gold. And you should definitely incorporate that into your business operations.
Outro: Thanks for listening to the KayaCast podcast. We hope you enjoyed the show. Don't forget to subscribe to our podcast in your favorite podcast app, or visit our website to learn more about our guests and to access the full archive of episodes from the show. Join us next time as we continue to explore the world of cannabis and help you grow, launch, and scale your business.