What Do You Do if Customers Are No Longer Wrapped Around the Block?

 

What Do You Do if Customers Are No Longer Wrapped Around the Block?

Cannabis Recession

In some places, the sale of cannabis has slowed dramatically; in fact, in some states, dispensaries are actually closing. Why? The initial surge of something new happened everywhere, but the newness is wearing off. As we have seen, with a 60% decline in market value of many public companies, investors now are looking more for a return on their investment (ROI).

Investing

As a result of the decline, investors want a significant increase in the cost of funds. In fact, it has reached the point that in many transactions, the interest rate charged is 600 basis points risk premium over the LIBOR rate (average London Inter-Bank Offered Interest Rate) for the duration of the loan. Currently, the 1 year LIBOR interest rate is 1.65%. If you add 600 basis points to the LIBOR base, you have an actual interest rate of 7.65%. The LIBOR rate moves with the direction of interest rates. Thus, if the LIBOR rate were to increase, then your cost of funds would go up.

Some LIBOR loans have an annual cap on the maximum; this is how much the interest rate can move in one year. For the most part, but not always, the cap is 2% per year. In our example above, if interest rates move up so that the one-year LIBOR moves from 1.65% to 4%, your loan rate will go from 7.65% to 9.65% for the next 12 months.

Investors are now holding borrowers more accountable for results, and you, as the dispensary owner, have to look at operating expenses. Most importantly, what do you do to attract new customers while retaining as many of your existing customers?

Sales

On our show recently, America’s Cannabis Conversation, we had a Special Segment Manager from Lightspeed talking about how a point of sale software can help to build stronger relationships with existing customers. This can be done by using Point of Sale (POS) to build a business by marketing special offers through the contacts on the POS list.

We think our unique channel platform allows you to more fully market your company and its products and services in your local market. With the increase in business, you will be able to spend more of your budget in attracting new customers. In the past, when the lobby was full, and people were waiting to get into your store, marketing was the furthest thing in your mind. Now, it has to be the Number One thing you think about!

Contact

Why not consider talking to us about how local marketing can help build your business for the long-term. Call us at Tel: 1-888-420-8884 and see if we can help you grow your business.

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