If you live in any town in America, there’s a good chance somebody is selling their smoke shop—or will be soon. And if you’re an industrious soul with some spare change, you might feel the magnetic pull of Opportunity.
It’s not a bad idea. The industry is fun, constantly changing, and, for some people, quite lucrative. It’s also over-regulated, crowded, and wobbling on the edges of legality.
So before you invest your nest egg into reviving a sinking business, it pays to think through a few things first. After speaking with more than a dozen past and current smoke shop owners across the country, we’ve compiled the pearls of wisdom that stood out most for your edification and entertainment.
Mind Your Business.
Not only do you need to know the business of smoke shops—the products, distributors, the state laws, the attitude of local law enforcement—you need to know what contribution your store will bring to the marketplace.
Many owners suggested not to compete on price—a new business starting a price war rarely works out—but that doesn’t mean not to compete at all. Whatever it is that draws you to the counterculture should be the feeling that customers get from your store. One owner explained that “calmness” is his differentiator. With gentle music, mellow lighting, and wide aisles, his store embodies the soothing effects of a CBD bath. Your store should probably be different, but it needs to have an identity.
Pivot!
Nearly every owner interviewed expressed surprise with some part of the business. From the big sellers to the overlooked items, it’s hard to predict what will make customers go gaga. Whatever it is, embrace it—even if it’s not your favorite item.
One shopkeeper recalled equivocating over e-cigarettes when they first came out. He ultimately decided to read up on the brands, side effects, and technology. Quickly, they became his bestseller, providing enough profit to allow him to open a second location.
Stock Up.
Newcomers often try to save cash by going light on product. But nothing repels repeat business like a store that’s sold out. Don’t get caught out of stock. If you need to open light, it’s a smart idea to invest initial profits back into inventory. It’s a crowded market, so nobody will wait for you to get a fresh shipment when they can find what they need down the street.
Get Online.
Smoke shops are blessed to traffic in the real world, but that doesn’t mean it’s okay to neglect the digital world. Think of your website and social media accounts as the modern storefronts. They’re how customers know you exist, and they provide a quick taste of what you do. It’s also how modern word-of-mouth works. Some stores live and die by Google Reviews. An Instagram account won’t be your most important asset, but it is necessary.
Get Out There.
Nearly every owner said they learned something vital through networking. Go to trade shows. Join industry associations. Talk with people who’ve walked in your shoes. “I couldn’t believe I never thought of putting LED lights in my display cases until about year four when I saw someone else doing it,” one owner said. “It made everything a lot easier to see.”
Continue the Education.
The counterculture moves quickly. New products come out all the time, and a significant part of the customer base is extremely online. It’s best to stay ahead of the game. So keep up with the online forums and the influencer reviews.
It’s also smart to educate your staff on how to help customers. The benefit of brick-and-mortar stores is the sales experience. Sometimes, walk-ins think they want one product but might be better served by something else. If you can steer someone toward a product that really works, they’ll come back.
Exercise Patience.
This is a booming industry. A new smoke shop moving in (or just changing names) isn’t enough to make anyone get out of bed. Expect the first several weeks to be slow. Use that time to study.
The owners who treat the business like a get-rich-quick scheme don’t tend to last. Strip malls are haunted by the ghosts of smoke shops past. It’s better to focus on serving your customers and let the money come from the process. It’s either that or watch your storefront become a Spirit Halloween.
Scope Your Competition.
Smoke shops have a relatively low barrier to entry but fierce competition. Before you buy a store, it pays to check out what’s nearby. Do a fact-finding mission to every store in a 10-mile radius. Browse the goods, then get back in your car and write everything down.
But—and this is crucial—don’t take what you see as gospel. The brutal reality is that many smoke shops are poorly run. Some are the result of an inheritance. Some represent the dreams of business school dropouts with obliging parents. And some, of course, are profit machines. Know the difference. Success is won in the trenches.
Scope Your Competition.
Smoke shops have a relatively low barrier to entry but fierce competition. Before you buy a store, it pays to check out what’s nearby. Do a fact-finding mission to every store in a 10-mile radius. Browse the goods, then get back in your car and write everything down.
But—and this is crucial—don’t take what you see as gospel. The brutal reality is that many smoke shops are poorly run. Some are the result of an inheritance. Some represent the dreams of business school dropouts with obliging parents. And some, of course, are profit machines. Know the difference. Success is won in the trenches.
Make a Plan.
The best way to start any business is with someone else’s money. But in this industry, that’s hard to come by. Despite the industry’s popularity, many banks are still wary about doing business in this sector. As recently as June, House Republicans axed legislation that would’ve shielded federal banks that worked with cannabis businesses.
Even if you have enough capital to buy a store yourself, disasters can strike. From police raids to product bans, unforeseen events can put you in need of a loan. So it’s important to have a business plan. A well-designed plan is the best way to convince a lender to stake your dream.
