Keep your extraction organization relevant by recognizing ways to stay ahead of the curve.
Extraction businesses can future-proof themselves and survive massive shifts in the market by keeping up with consumer demand, improving internal processes, controlling the supply chain, and investing in advanced extraction equipment. The extraction industry isn’t just growing, it’s evolving.
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Given how unpredictable the world has become, the idea of “future-proofing” can seem daunting, unnerving, and even futile. After all, how can anyone possibly forecast what’s to come in this day of volatile markets and ever-shifting fiscal landscapes?
This question rings especially true for botanical extraction, an industry that’s fairly recently garnered legitimacy in the marketplace. However, it’s important to remember that even the most well-established industries started as seedlings, and they only grew into massive successes because someone kept an eye on the future.
Some steps toward future-proofing are universal across industries; others are of strategic importance to extraction technicians and facility managers. After poring over the research and examining successful ventures in a number of different sectors, we’ve found nine ways that you can future-proof your extraction business.
1. Know the Current State of the Extraction Market
Markets are in a constant state of flux, but if you read the tea leaves correctly, you’ll know when changes are coming and how to prepare for them. As an extraction professional, you need to conduct market research to keep tabs on shifting consumer tastes and industry trends, and to do that, you’ll need reliable data.
Luckily, the internet age has given us a never-ending stream of information. Credible sources are constantly conducting research and forecasting the future for all types of industries, including botanical extraction.
One such source shows that the botanical extract market size was estimated at $9.24 billion in 2021 and is projected to hit more than $42.89 billion by 2030, with a CAGR (compound annual growth rate) of 18.6 percent during the estimated period 2022 to 2030. Meanwhile, significant trends include:
- Increasing applications of extracts in pharmaceutical and cosmetic industries
- Growing market for recreational botanical extractions
- Increasing prevalence of solvent-based extraction methods
- Growing demand for botanical extractions in North America
Information from these forecasts can be invaluable to your extraction efforts, enabling you to grow as your industry grows by adding team members, expanding operations, and investing in more cutting-edge technology.
2. Stay Up-to-Date on State Legalization
Increased medical and recreational use of botanical extracts is fueling the industry’s growth, but increased consumption in the medical and recreational sectors is only possible because new laws expand the legalization of botanical extracts into new states.
If you stay on top of the shifting legal landscape, you can be the first in your industry to gain a foothold in new territories and marketplaces. Without this information, you could be left in the dust by the competition. What’s more, when providing financial services to extraction businesses, banks and institutions have to consider compliance costs, legal costs, logistical costs, educational costs, and reputational costs. This underscores the importance of knowing your local botanical extraction laws.
The popular site Investopedia constantly updates its listing of state-by-state legalization laws, and it’s an excellent resource that covers medical and recreational consumption.
3. Be Ready for Federal Legalization
With several states including New York, New Jersey, and Virginia passing adult-use botanical extraction legislation in 2021, the number of legal states is now up to fifteen. Clearly, the conversation about federal legalization is at a pivotal moment. According to a Gallup poll, more than two-thirds of Americans support measures for nationwide legalization.
Federal legalization will undoubtedly open enormous opportunities for companies to grow, but if they aren’t prepared to bring their products and services to new markets, they risk entering an oversaturated marketplace. When federal legalization hits, it will hit suddenly and all at once. Take these steps to prepare:
- Strengthen your infrastructure: The first step toward expansion is to establish a strong infrastructure on a local level. Make sure that operations, systems, and protocols for all departments are on solid ground in order to expand without missing a beat.
- Get your finances in order: Once federal legalization happens, you’ll have access to the complete banking and lending system, and you’ll be able to obtain loans from the Small Business Administration.
- Build your brand: When a national audience comes into focus, having a trusted brand will be more important than ever to attract new customers. You’ll want to be able to deliver quality products on a consistent basis, two major tenets of trustworthy brands.
Companies that are future-proofed are prepared for all scenarios, both likely and unlikely, and in the world of botanical extraction, federal legalization is very likely to occur.
4. Be Active With Peers in the Extraction Industry
Anyone who runs a business has been invited to a networking event at one time or another. Reasons to attend are always the same: You’ll get a boost to your career and make a name for yourself by forging relationships with like-minded individuals who can be valuable collaborators throughout your career.
In simple terms, networking can supply your business with resources for company growth. Staying active with peers in the extraction industry fosters a high-quality business network, which opens the door to industry knowledge and trends, brand awareness, mentorship, new technology, the chance for increased profits, and even recruitment leads.
Some of the best ways to network in the extraction industry include:
- Business seminars
- Networking groups
- Social media
By attending events and cultivating contacts both online and in person, you connect with other people who share the same ambitions and goals as you. While you ultimately want to best the competition in the marketplace, working together to strengthen botanical extraction can serve to benefit the entire industry.
5. Have Agility in the Types of Extraction Products You Manufacture
If botanical extraction consumers have taught us anything, it’s that they love variety. Having a wide range of products keeps consumers interested in your brand and prevents your company from stagnating in the industry.
A strong product diversification strategy can introduce your company to new markets. While this requires investments in equipment and staff, it can help your company grow and prepare for unexpected changes in the marketplace.
- Manufacturing multiple products captures more customer attention, giving your brand a boost and increasing profitability.
- A more varied array of products exposes you to a wider range of marketplaces, naturally increasing your customer base.
- Diversifying your products often leads to technological advancements. Your team can learn new manufacturing techniques.
- Take advantage of cross-selling. This is more possible with product diversification, as you can introduce older products to new consumers you are targeting with new products.
- Guard against unexpected recalls. If you diversify your product output, you stand a greater chance of surviving unexpected product recalls.
Businesses that don’t work to add new customers are bound to fail in the future. Expanding and diversifying your product output guarantees new customers and a greater market share.
6. Know and Control Your Supply Chain
Merely understanding your supply chain only goes so far; you need to have intimate knowledge of your supply chain and control how it’s utilized and deployed. When you control the supply chain, you can steer it to benefit your business now and in the future.
On the most basic level, the botanical supply chain is made up of five stages: cultivation, manufacturing, distribution, transportation, and retail.
- Cultivation: The plant is grown and harvested. The players involved at this stage range from large farms to small backyard growers.
- Manufacturing: This is where your efforts come in. Manufacturing involves several steps, including extraction, where you create a number of by-products from the plant.
- Distribution: Here we arrive at post-processing and packaging. Distributors can ship or store extraction products or act as an external sales team.
- Transportation: Only a small number of state-approved distributors are certified to move the extractions from facilities to retail shelves. Independent third parties are often the main mode of transportation between all parts of the supply chain.
- Retail: Commonly known as dispensaries, extraction retailers provide a setting for consumers to purchase botanical extraction products.
The components of an extraction supply chain—growers, extractors, distributors, transporters, and retailers—all have their own moving parts. If you can effectively engage in supply chain management, you can lower costs and kickstart a faster production cycle.
7. Invest in Technology
The tools required for solvent-based extraction vary greatly in size, function, and expense. While some extraction equipment is heavy-duty industrial machinery, other equipment is the size of a tea kettle. Regardless of size, all extraction equipment components work in concert to efficiently and cost-effectively produce a marketable product.
Spending money upfront for high-end technology is a smart investment. If you don’t invest in tech, you’ll end up having to replace your equipment every few years. And when you’re constantly playing catch up with equipment, it’s impossible to break into new markets or steady your business when markets dip.
Here are a few ways you can proactively update your technology:
- Integrate cloud technology: More and more companies are transitioning to online-based systems to store documents and other assets. This strategy ensures that accessible backup files exist and staff members can locate records even when they’re not at the office.
- Invest in cybersecurity: Technological evolution brings a variety of bad actors trying to infiltrate your network. Investing in cybersecurity measures will give your organization a better defense against various attacks, such as malware and data breaches.
- Use data to learn about customers: Technology can help you discover more information about your audience. Knowing their traits and behaviors will help you succeed in the botanical extraction industry.
Smart investments in extraction-related technologies will help you stay ahead of the curve.
8. Have Processes in Place for Internal Business
Even while carrying out day-to-day operations, it’s vital for your business to have a goal that all team members share and understand.
A robust internal process includes a series of steps that a business uses to accomplish goals and identify areas that need improving. Internal processes don’t just help team members understand their responsibilities, they also enhance efficiency and productivity.
If your extraction team doesn’t understand individual roles and how they fit together, cracks are bound to appear. Improve your internal processes by:
- Conducting an internal audit: Examine how your business operates and create an outline that sketches each team member’s responsibilities.
- Setting objectives: Through your audit, you might decide you need to improve how you handle solvents. You could then set an objective toward improving that area.
- Explaining your mission: Share with your internal team the purpose of improving internal processes. Through this conversation, team members might make valuable input.
- Finding ways to automate: Cutting down on costs and tidying up inefficiencies is a surefire way to extend the life of your business.
- Reevaluating regularly: Revisit your internal processes every so often to ensure clarity and stability.
9. Build Your Brand and Market It
The botanical extraction industry occupies a unique space in the marketplace. It’s not food and beverage, nor is it automobile or technology. If anything, it’s a lifestyle. This characteristic, in and of itself, means that its consumers share its unique qualities. Consumers interested in botanical extractions want brands that reflect their sensibilities.
This can be used to your advantage. Build your brand with an eye toward these consumers and the lifestyle they choose. Market your product with these buyers specifically in mind. When brand and marketing come together into something memorable, you’ll build trust with your customers and stand out in a singular way. Every time your product is seen on a store shelf, a customer will consider a purchase for years to come.
