What do cars, food, alcohol, cannabis and health care have in common? They are all goods or services from heavily regulated industries in the United States. In addition, they are also from industries that offer lucrative new business opportunities.
If you are an entrepreneur who wants to create a startup in a regulated industry, the idea of compliance can be unappealing at first. Luckily, a little bit of planning and careful management can make things easier. Consider these tips before throwing out your dreams of starting a brewery or opening a dispensary.
1. Understand (and follow) the laws
In the U.S., industry regulation occurs on three levels: federal, state and local. While all businesses have to follow regulations, industries that the law considers “regulated” are different. If you plan on starting a regulated business, there are many additional requirements that you must meet before you can legally open.
2. Enter the market with a strategy
Because each regulated industry has its own rules and dynamics, you should plan on entering the market with a strategy. In addition to understanding how applicable regulations work, keep an eye on politics and competition within the industry. Never underestimate the value of diagraming your business model, and invest in customer relationships.
3. Find ways to keep innovation alive
Although regulation undoubtedly puts a compliance burden on businesses, that does not mean that innovation cannot thrive. To create an environment that fosters learning and growth despite regulations, make an effort to leverage technology. In addition, building a solid team to support your work can make all the difference.
Before giving up on your idea to build a heavily regulated startup, consider these three tips. There may be some unique challenges ahead, but that does not mean your endeavor cannot be successful.