In late 2022, the Economist reported that “a global recession is inevitable in 2023” because “[t]he world is reeling from shocks in geopolitics, energy, and economics.” Of course, a small cannabis retailer can’t begin to tackle global challenges of this scale. However, that doesn’t mean you can’t prepare for a recession within your sphere of influence.
While it’s hard to predict the future, we can all prepare for it with a smart recession strategy. Yes, you will likely have to cut costs and face a few other tough decisions. But with automation, data-driven decision-making, and a focus on your loyal local customers, there are ways to navigate the coming market uncertainties.
How To Prepare Your Business for a Recession
To weather a recession in the cannabis market, retailers should consider reducing staff hours instead of layoffs, focusing on building customer loyalty, adopting technology to automate operations, and pivoting to a lean inventory model that is responsive to consumer habits.
1. Deleverage, Cut Costs, and Get Lean
The first step to preparing your business for the looming recession is to review your expenses. The goal is to find areas where you can cut costs without affecting the quality of your services.
A few ways a business can cut costs is by managing a tighter inventory, reducing marketing budgets, and reducing staff hours. However, most experts agree that layoffs are a last resort, considering the time and expense you’ve already invested in hiring and training. As per the Harvard Business Review, “The companies that emerged from the [last recession] in the strongest shape relied less on layoffs to cut costs and leaned more on operational improvements.”
And don’t forget about your business debts. The Harvard Business Review also stated, “Companies with high levels of debt are especially vulnerable during a recession.”
Studies have demonstrated that “[t]he vast majority of businesses that shuttered because of falling demand were highly leveraged.” If you are overleveraged, consider renegotiating to get more favourable terms or consolidate under a single payment.
2. Automate and Analyze with Technology
“It is a capital mistake to theorize before one has data,” at least according to everyone’s favourite detective, Sherlock Holmes, in “A Study in Scarlet” by Arthur Conan Doyle. The same goes for business decisions. You need concrete data before you can develop a strategy to prepare for a recession.
This is especially true if you are trying to cut costs, whether operating a lean inventory or reducing staff hours. You’ll need to plan based on what cuts will produce the maximum savings with the most negligible effect on your customers.
The best way to do that is by pulling intel from the dozens of reports available through the TechPOS dashboard. You’ll have the ammunition required to get lean during a recession, from inventory and sales reports to the budtenders’ sales reports.
Plus, TechPOS helps you automate many of the most routine administrative tasks. Automation is especially helpful if you have had to cut hours or, worse, already had to lay off staff members.
By automating some of your regular operations, you won’t waste time creating schedules, overseeing cash flow, creating promotions, and manually updating business reports. Instead, you can spend your time at the counter, interacting with customers and running a business.
3. Adapt a Hyper-Local Strategy
In a recession, it is more important than ever to think locally, not only for your mental health (you can’t control the stock market or interest rates) but for your long-term local business objectives.
As a brick-and-mortar cannabis company that interacts with customers in person daily, you’ll already understand that your local customers keep the lights on. So, consider ways to encourage their continued loyalty.
We recommend making it easy to shop. Remove any barriers they may experience in browsing your inventory and making a purchase. Barriers include the stress of traffic and parking, long lineups at the till, and even social anxieties.
TechPOS helps you reach customers where they are. We offer an omnichannel approach to sales. Our system itegrates in-store POS, Express Checkout, eCommerce, Click and Collect, Pay Online-Pickup In Store (POPIS), and Pay Online-Delivery at Home (PODAH).
You can also reach your loyal customers with email and text marketing — two more helpful tools within the TechPOS arsenal. If you stay at the top of their inbox, you’ll stay top of mind whenever they are shopping for cannabis.
Cannabis Is Recession-proof, So Long as You Strategize Now
The cannabis industry, as with other sectors, is facing the possibility of a recession. To survive, cannabis retailers need to prepare by reviewing their expenses, leaning into technology, and supporting their most loyal customers.
We are here to help you weather the coming storm with an all-in-one ecosystem of support. Our POS system offers much more than a point of sale. It’s a centralized dashboard to help you run every aspect of your business better.
If you want to learn more about how technology can help you survive a potential recession, contact us today for a demo.
