Entrepreneurs need to keep an eye on start-up costs to ensure that the money they’ve raised stretches as far as possible. But focusing solely on price can blind entrepreneurs to potential losses in the future by pursuing the cheapest option.Keep the following three tips in mind as you balance price, quality, and return on investment when launching your cultivation start-up. 1. Cheap facility designs are expensive. Buying a cheap floor plan online isn’t going to help your business. Just because facility designs are plentiful online, it doesn’t mean you should pursue them. Most of the money raised for new cultivation businesses goes towards capital expenditures, so properly designing your facility from the start will help to ensure the best return on investment.Cheaping out at this stage can result in nightmarish consequences later down the road. Fortunately, several design firms that cater to the cannabis industry have arisen over the last few years. There are many unique aspects to an indoor cannabis facility that differ from a typical residential or commercial building, and in greenhouses, there are vital components to incorporate that aren’t standard with just any greenhouse. A regular architect can help you determine the number of bathroom stalls you need in your facility, but they’re less helpful in designing workflow to prevent cross-contamination, excessive plant handling, and sizing dry room space. A greenhouse salesperson can provide you with a sturdy greenhouse that will last for decades, but how about a light deprivation system that allows dehumidification in each zone? Or how about an odor neutralization system? Spending the money on proper facility design today will prevent expensive retrofits tomorrow. 2. Not everything is a commodity.No grow light is the same, no fertigation system is the same, and no environmental control system is the same. Treating these components as commodities can come back to haunt you. Shopping around for the best price on plastic nursery pots makes sense, but cheap is never best when it comes to complex cultivation equipment and technology. When entrepreneurs new to the horticulture industry view everything as a commodity, their frugality can turn costly. Why pay $1200 for an LED light when you can order them direct from China for a couple of hundred dollars? Why hire a mechanical engineering firm specializing in cannabis when your local HVAC guy could probably do it? Why pay for a sophisticated environmental control system when you can buy a cheap, off-the-shelf version at your local grow shop?This thinking is penny-wise and pound foolish. The savings you realize today by going cheap will likely be obliterated by equipment failures, diseased plants, and retrofits. If you’re new to horticulture and can’t determine what’s a commodity or not, hire an expert to help you. Saving money makes sense. Viewing everything as a commodity does not. 3. People are your greatest asset.Saving $40,000 by hiring a cheap head grower can easily cost your operation ten times that amount in unsaleable plants, unnecessary expenses, and lost market share. Even the most passionate grower with an insatiable appetite for learning will face a steep learning curve if there is no commercial experience under their belt. Cheap growers are usually inexperienced growers. Seemingly minor oversights at the beginning of the crop can result in tragically expensive oversights by the end of the crop.Timing and attention to detail are the most common skills that new growers lack. I once consulted for an operation in Colombia whose head grower was pleasant but lacked experience and attention to detail. On one site visit, I noticed thousands of young seedlings beginning to grow into each other, and I recommended they be transplanted or at least spaced apart. When I returned a week later, the seedlings hadn’t been touched! They were tall, lanky, and growing into each other. When pulled apart, the stems nearly snapped in half. Because the grower didn’t realize the importance of doing things on time (spacing and transplanting), the team had to invest extra labor when transplanting, transporting, and supporting these delicate plants. Furthermore, the crop was so tender that it suffered an increased susceptibility to pest and disease infestations. This was just one decision made by an inexperienced grower, which had expensive and long-lasting ramifications on the crop. What other costly decisions did the grower make that day, that week, or that year?Beware: the true cost of going cheap is very expensive.
Ryan Douglas helps new cultivation businesses come to market quickly and spend less money getting there. He is the founder of Ryan Douglas Cultivation, LLC and author of From Seed to Success: How to Launch a Great Cannabis Cultivation Business in Record Time. Ryan has worked in commercial horticulture for 23 years and specializes in legal cannabis start-ups.
Before entering the cannabis industry, Ryan spent 15 years as a commercial greenhouse grower of ornamental and edible crops, growing up to 600,000 plants annually. As Master Grower from 2013 to 2016, he directed cultivation for Tweed Inc., the flagship subsidiary of Canopy Growth Corporation. Ryan now offers cultivation advisory services to cannabis operators worldwide, and he can be reached through his website, douglascultivation.com.
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