How to Start a Dropshipping Business
Even Better... How to Start a High Risk Merchant Dropshipping Business
In January 2021, I lost my corporate-level cannabis industry job and was completely devastated. However, after devastation came relief. It was a toxic, dysfunctional environment that was weighing on my sanity. I went in as a Human Resources Director determined to make a difference and left disheartened by greed and employee abuse masked as family ties.
That experience gave me valuable insight into my position in the retail world. I had also worked management for one of the largest Lowe's stores in the country, spent some time with Victoria's Secret (It was THAT bad, yes.), as well as built and staffed stores for Spirit Halloween. Clearly I was born to retail but how could I combine that ability with my need to remain a medical cannabis user and advocate from outside of the cannabis industry?
That's when the idea of an online head shop was born. To be honest, Knotweed Supply House was first a health and wellness company that made organic bath salts. Then we made resin accessories and t-shirts for a whole five minutes. When I realized that the side hustle while job hunting needed to become a full-time job with a salary I threw my bossy pants on and wrote out a new business plan.
How could we continue to travel, hike and build a business that was tailored to my lifestyle and of the customers that I had been serving? A hybrid physical retail/ online dropshipping model turned out to be the perfect combination. We did not have a large space to hold inventory, only a 10x12 spare bedroom turned war room and the ability to make connections with vendors easily. So how did we get here? What is a High Risk Merchant? Dropshipping? Ah! Don't worry, we got you...
First, a High Risk Merchant is one that provides "illicit" substances or materials whether it be online or in a physical store. They are more commonly referred to as liquor stores, medical and recreational cannabis dispensaries, CBD retailers, smoke shops, casinos, head shops, etc. You know, the places where everyday regular people shop in the majority. Whether the people who operate or purchase from these establishments consider these to be illicit or not does not matter to the federal government or the banking system. Depending on the niche you decide to pursue, you may just find yourself in this category and in need of guidance. We hit several brick walls just to ensure smooth credit card transactions at mobile events. That's why it's as important as ever to have a plan of attack before diving in to the High Risk market and be ready to hear NO!... a lot!
To get right to it...
The very first thing you should do when starting your new venture is to establish your business name and go get that LLC! Do not hesitate. Your intellectual property is your entire business at the end of the day. I can not stress it enough... get that paperwork in order! File for necessary trademarks, and business licenses. I am lucky to live in Colorado and only need a Sales Tax License with my Articles of Incorporation to be in business. Make sure to check your local and state regulations on what's required to be operational.
Once the ink has dried go take that name you just preserved in legal jargon and get yourself a domain name to match. Try and stay as close as possible to your original DBA title to guarantee consistency for your customers. You'll want to do the exact same thing with every social media platform you can get signed in to. Be prepared, just those few steps alone will cost you anywhere from $50-$300 depending on the state where you live.
Don't worry if you don't have anything to post just yet; the content will come. You've saved your place. Take a breath and stay tuned for details on how we started a dropshipping business for our online head shop and lifestyle company while managing two dogs, an adventure cat, and a few rad adventures along the way.
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