In a recent post, Best practices for managing cannabis inventory, we spoke at length about the specific ways to make sure you’re stocking the right products in the right quantities at the right time to maximize your profits. The only way to ensure your cannabis recreational store or dispensary is running at top speed is to have the reports and analytics at your fingertips, and there are generally three paths to get those data tools:
- Build it in-house
- Hire a consultant
- Purchase a software
In this article we will go through each of these options and discuss the pros and cons of each approach as well as how to price out the solution that best fits your company’s needs and culture.
Building cannabis reports, analytics, and predictive models in house is expensive, time consuming, and hyper-custom
- Hyper-customized to your needs
- No one but your employees see your data
- Need to already have, or to hire, the technical talent
- Employees need to have bandwidth to focus on the project (in addition to existing responsibilities)
- Time consuming for employees to build from the ground up
- Time consuming for leadership to manage the process
- Lose out on best practices learned from other companies
Expected cost: 6-30 months and $50k-$500k
For most business owners and managers, the first inclination is to build your cannabis business tools with existing staff. They already know your business and your processes, so who would be better?
That presumes, of course, that your existing employees have the bandwidth and technical skills to develop these data tools. Most of your workers are already packed with their day-to-day responsibilities and don’t have room to focus on a new, big project with poorly defined scope and expectations. And even if someone had room and was excited to pursue this project, do they have the skillset to develop data warehouses and analyze the data in a way that yields actionable insights to drive profitability?
Assuming you have employees with bandwidth and capacity to build and manage what you need, it will still take them a good amount of time to figure out your data sources, build the reports and analytics, and clear them with senior leadership to ensure they address your needs. Many companies we’ve talked to will allocate 6-24 months for internal build-outs, and someone in leadership has to actively manage that development process the whole time. Whew, it’s exhausting just thinking about that in today’s rapidly changing environment!
If you don’t have existing employees with the skills and bandwidth, and you still want to build in-house, then you’ll need to hire new employees to fill that position. Data talent is at a premium in today’s labor marketplace, and you’ll want someone with experience doing data architecture, software integrations, data modeling and data visualizations. You can expect an additional 3-6 months for the hiring process and an additional cost of $150-250k in salary and benefits for a qualified data professional. That in addition to the time and energy it costs you to interview, hire, train, and manage a new employee on your team.
If you do have the benefit of the time, money, and bandwidth to manage your own internal build-out then you stand to win on customization to your specific problems and processes. You also keep all of your data in your four walls which reduces complexity around contractual obligations and data privacy.
Ultimately, unless you’re a huge operator with a 5+ person IT & analytics team, building in-house usually results in sub-par data solutions that are too expensive and time consuming for today’s rapidly changing market.
Hiring a cannabis data consultant can speed up implementation but is still expensive and time consuming
- May be higher caliber data professionals
- Shares experience from working with multiple clients
- Need to know how to select and manage a data consultant
- Consultant has limited bandwidth to manage all their clients
- For project-based, need to carefully define scope and complexity
- For hourly-based, need to be extra careful not to run up the tab with work that doesn’t help the team
- Generally expensive in terms of time and money
Expected cost: 3-12 months and $15k-$250k
If you don’t have the resources to build in-house, another possible option is to work with a data consultant. Data consultants outside the cannabis industry are often much more expensive and don’t understand the nuances and complexity of this industry, so we’ll focus on the few consultants we’ve seen that are dedicated to cannabis and hemp businesses.
The good news is that, if they’re surviving as a cannabis data consultant, they usually have some degree of expertise with technical data skills. Moreover, unless you’re their first client, they have the benefit of the experience of working with other cannabis or hemp companies and can make suggestions for how to improve your requests or processes. Also, assuming you have very specific desires and needs, a dedicated consultant can focus on building exactly what you hire them to deliver.
The bad news is that vetting, hiring, and managing a data consultant is a whole other skill that takes time and energy. First, you need to decide if you are going to hire them on a project basis or on a retainer where they are paid for the hours worked. If it’s a project, then someone needs to define very clear and explicit technical specifications for what you’re looking to accomplish. Then the project can be accurately bid out in terms of time and cost and you won’t be left frustrated or surprised later. If it’s more of ongoing work with an hourly retainer, someone needs to very carefully manage the consultant to ensure they aren’t bloating their hours or doing work that no one needs. Any which way, make sure to set aside 1-2 hours for every 5 hours your consultant works for project management and data validation.
Perhaps most importantly, there simply aren’t that many dedicated data consultants in the cannabis industry. The few that we’ve met won’t start a project for less than $5k / month and usually require a 3-6 month commitment. And they will naturally devote more of their time and resources to newer clients as well as clients that pay them more money. So the more successful they become, the less bandwidth they’ll have to work with you directly.
Overall, consultants make a lot of sense if you have someone with experience managing technical implementations and have a narrow and clearly defined scope for what you’re looking to accomplish. The more unknowns, and the less time and energy you have to manage the process, the less a stand-alone consultant makes sense to design and develop your cannabis data tools.
Cannabis & hemp data software is the fastest, easiest, and cheapest to route to activating your data (when key considerations are met)
- Pre-built integrations & data tools that are fast to implement
- Gain benefit of extensive experience from other cannabis & hemp companies
- Clearly defined implementation plans and deliverables
- Usually the lowest cost option in terms of raw dollars & management time
- Does not require any technical employees
- Need to be careful about data privacy and data sharing policies
- Picking a data company that addresses your challenges & opportunities
- User seats & customization can cost more money
Expected cost: 2 weeks – 3 months and $500 – $5,000 / location
When a cannabis or hemp company is looking to optimize for speed, ease, and cost, it makes a lot of sense to look at existing data vendors and software within the industry. There are a lot of advantages to working with a pre-built data toolkit as long as key considerations are addressed.
For teams seeking ease and speed, it makes sense to work with pre-built integrations that already work with your software. It’s extra awesome when the reports and analytics you need are also already built and it’s a simple as just turning it on! Even answering 80% of your needs within weeks can often be a lot better and more impactful than waiting for months to reach 100% (especially when the needs are continually evolving and changing). It’s also worth noting that pre-existing solutions usually have well-defined workflows for implementation, delivery, and training which ultimately reduces the complexity and management time.
For teams that are looking to implement best practices, working with a data vendor that’s seen a lot of different types of environments from small to big can also offer some big benefits. Having an experienced partner can provide significant strategic value as they help guide the thought process for how to augment, streamline, or further inform the key questions you’re looking to answer. Most importantly, a talented and experienced data professional will help you simplify the analytics and reports into something that’s intuitive and actionable to empower you to achieve your business goals.
Perhaps most importantly, an aligned data vendor will match your team dynamic regardless of the time and talent you have. Even if you have technical talent, their time is best spent focusing on higher order analysis and not so much on the data plumbing. And if you don’t have technical staff, it’s valuable to have a strategic partner that can work with you to train your team on how to use the data tools to help you earn more and stress less.
Although data software is almost always the fastest, easiest, and most affordable solution, that are some notable limitations and considerations. First and foremost, there needs to be a vendor that has software for your specific use case. In a previous article, Data companies in the cannabis industry, we highlighted all of the data vendors and their key areas of focus. Although there are many companies doing market-level aggregation, there are relatively few that will help you calculate your profitability or highlight specific levers to pull to grow your profits.
If you do find a software that fits your needs, be extra careful around data privacy and data sharing. With growing competition and more sophisticated players entering every day, your business data is a competitive advantage that can dramatically impact how you set yourself apart from everyone else. Many of the market-level aggregators will provide reports in exchange for owning and sharing your data with your competitors – is the value you gain worth the cost? How much of your competitive edge are you losing if you no longer own your own data?
Finally, you need to be aware of potential hidden costs within any data software contract. A lot of data vendors will charge more money for every additional user. Others still will lock you into annual contracts where you have little flexibility to cancel (even if it’s not solving your needs). Some data vendors are very rigid and do not allow for any customization at all. For the ones that do, be careful to ask them about implementation periods and and any customization costs after that timeline. All of these concerns can be addressed up front with thoughtful questions in the vetting and negotiation part of any engagement.
In summary, software data toolkits dedicated to cannabis and hemp companies usually make sense for the vast majority of businesses, small to large. Assuming the tool you need exists, smaller companies stand to win by empowering and multiplying their existing team while larger teams can dramatically increase speed and decrease the cost of implementation.
Your data is your data, and it should stay that way
At Cannabis Big Data, we have a very fundamental philosophy: your data is your data! We recognize how important and valuable your data is to your ongoing business and profitability, so we do not share your data with anyone else. All of the data tools we build for you are for you and your team only, and we like to keep it that way. Feel free to ask us why and we’re always happy to share.
Do you have a clear idea of your current challenges and opportunities? Do you need help picking the best data solution for your team? We always love to hear from you on our contact page and are happy to give you an unbiased perspective on who will best serve your needs. If you’d like to chat about your specific business and needs, feel free to schedule a free data consultation.
We firmly believe that a rising tide lifts all boats, and if we can help you (and our data peers) succeed in this rapidly growing market, it is our honor and pleasure to do so.