Accurate Forecasting: A 4-Step Guide for Cannabis Retailers

Accurate forecasting is crucial for cannabis retailers to thrive in today's market. It helps you make informed decisions, manage inventory, spot trends, and plan for the future. In this guide, we’ll walk through Vetrina's 4-step process to create a retail forecast that simplifies the path to success.

Why Retail Forecasting Matters

Retail forecasting is the foundation of smart dispensary planning. It allows you to anticipate customer demand, manage your resources effectively, and make proactive choices to optimize operations. By understanding your market, customer behavior, and competitive landscape, you can project sales and adjust inventory to meet demand without overstocking or understocking.

Step 1: Setting Your Annual Revenue Goals

Your annual revenue goals act as the financial roadmap for your dispensary. They offer direction, focus, and measurable targets to work toward. Without clear revenue goals, it’s difficult to assess performance and make necessary adjustments.

The Role of Revenue:
Revenue is the driving force behind every dispensary. It informs your strategies, influences decisions, and determines long-term success. By integrating revenue goals into your business plan, you can sustain operations, grow strategically, and:

• Determine Scale: Define the scope of your operations.
• Allocate Resources: Make informed decisions on investments.
• Evaluate Financial Health: Measure performance and pinpoint areas for improvement.

Why Clear Revenue Goals Matter:
Setting well-defined revenue goals offers several benefits:

• Focus: Aligns efforts and resources toward a specific target.
• Motivation: Inspires your team with a common purpose.
• Measurement: Enables tracking progress, identifying gaps, and celebrating milestones.
• Market Insight: Encourages deeper analysis of market trends and competitive dynamics.
• Investor Appeal: Demonstrates strategic foresight and profitability, making your dispensary more attractive to potential investors.

How to Craft Your Revenue Goal:
Creating an effective revenue goal requires balancing ambition with realism. Here’s how:

• Assess Your Current Financial State: Look at historical performance, growth projections, and market conditions.
• Forecast Based on Data: Use historical sales data, market research, and financial models to project revenue.
• Align with Your Mission: Ensure your revenue goals fit into your larger business objectives.
• Stay Flexible: Regularly track progress and adjust strategies as market conditions evolve.

Step 2: Measure Your Progress with Consistent Timeframes

Consistent measurement is essential to track progress effectively. To gain meaningful insights, we recommend using weeks, grouped into 4-week "sprints."

Why Use Weeks Instead of Months?
Weeks provide a consistent data length, which makes comparisons easier. Unlike months, which vary in length, weeks offer:

• Consistency: 7 days per unit, every time.
• Precision: More granular insights, especially for tracking short-term trends.
• Industry Standard: Easier to align with industry benchmarks and compare performance across time periods.

Boosting Agility with 4-Week Sprints:
Breaking the year into 4-week sprints adds a structured rhythm to your operations, allowing for better insight and flexibility:

• Balanced Timeframes: Fits into natural business cycles, helping track and adjust strategies regularly.
• Regular Reviews: Frequent performance reviews keep teams aligned and focused on specific goals.
• Financial Alignment: 4-week sprints often coincide with payroll cycles, making financial reporting smoother.
• 13-Period Structure: Using 13 sprints per year provides more opportunities to assess and refine your approach than the typical 12-month calendar.

Step 3: Project Your Average Customer Spend

Once your revenue goals and sprints are in place, focus on setting a benchmark for your average per customer (APC). APC shows how much each customer is contributing to your revenue.

Key Factors in Projecting APC:

• Product Quantity: The number of items per transaction impacts APC.
• Price Points: Premium products typically increase your APC.
• Market Benchmarks: In the cannabis industry, APC often ranges between $38 and $87 in North America. Use these benchmarks to determine where your dispensary stands.

How to Predict Your Average Per Customer:

• Customer Behavior: Analyze purchase patterns and demographics.
• Historical Data: Look at previous sales trends and customer behavior to predict future performance.
• Market Conditions: Factor in seasonal trends and economic shifts that could influence customer spending.
• Product Mix: Assess how the variety and pricing of your products impact customer decisions.

Tools for Accurate Predictions:
Use data analysis tools like Vetrina’s forecasting features to make well-informed projections. Advanced analytics can help you track customer behavior, spot trends, and refine your predictions.

Step 4: Turn Your Revenue Goal into Action

After setting a revenue goal and understanding your APC, the next step is to turn those numbers into actionable targets. Here’s how to make your revenue goal a practical part of your dispensary’s day-to-day operations:

• Break It Down: Divide your annual revenue goal into quarterly or monthly milestones for easier tracking.
• Align with Business Objectives: Ensure your goals support your dispensary’s mission and broader business strategy.
• Evaluate Resources: Check if your current resources align with your revenue target. Adjust as necessary.
• Strategic Adjustments: Your revenue goals may require changes to your pricing, marketing, or product strategies.
• Communicate Transparently: Make sure your team knows the revenue targets and their role in reaching them. Collaboration and transparency are key.

Pro Tip: Conduct a SWOT analysis to identify the factors—both internal and external—that may affect your ability to hit your goals. This will help you navigate challenges and leverage your strengths to drive growth.

Conclusion

You now have the tools to forecast your revenue, set achievable goals, and adjust your strategies to meet your targets. Revenue projections aren’t static—they’re a living, dynamic part of your business strategy. By staying flexible and regularly reviewing your progress, you’ll be able to adapt to market changes and lead your dispensary to sustainable growth.

Ready to take your forecasting to the next level? Start planning, stay adaptable, and keep your focus on hitting those milestones.