With more regulation now than ever before, the cannabis sector demands good decisions to succeed. But how to make the best decisions for your cannabis company?
Use this actionable list to ensure your cannabis business decisions guide you through many of the most common challenges in the cannabis sector.
Interested in implementing these actions? Contact us today to learn more about how we can help.
Have a Cannabis Business Strategy in Place
The right cannabusiness strategy should outline your plan going forward, outline present- and long-term business objectives. Since the cannabis sector has so many moving components, you should be able to highlight an area that’s aligned with your company’s strengths.
For example, if you’re operating a cannabis nursery out of Oregon, you might have access to some of the most fertile soil in the US. The Willamette Valley is known for its living soil, and if you can take advantage of that for your grow, you can likely produce high-quality organic products that can compete with top brands.
Checking every box in a niche is challenging. But if you outline where your company fits and why, along with which niches you’ll target today and in the future, you have a better chance of succeeding in the cannabis space.
Even though many cannabusiness operators believe in scaling impressively, some are interested in sustainable approaches. Starting and maintaining a “mom-and-pop” style operation that supports your lifestyle is still a fulfilling option for some.
However, for those interested in a higher potential for revenues operating a larger, commercialized cannabusiness, it’s within the realm of possibilities. This is something that we can help you with.
Looking to scale your cannabis operation? Contact us today to learn more about how our services facilitate and support your growth.
Track & Analyze Key Cannabusiness Metrics
Your key cannabusiness metrics will vary from niche to niche. But one thing remains the same; you’ll use these metrics to show critical success factors. Your metrics should help you identify areas for improvement, along with how aligned you are with your projected operating costs.
For instance, cultivators use various metrics to measure their successes and shortcomings. These usually include average yield, yield per square foot, yield per watt of light, production per acre, fixed costs, variable costs, and stain cultivation. This offers insight into how much product they’re generating, as well as how each variable could be affecting their yields.
Metrics are also necessary for interested third parties, like investors. If you’re seeking investment, potential investors will want to analyze the metrics to evaluate your operation, comparing it to the competition. Your metrics will also add credibility to your operation.
Software for cannabis recordkeeping can work, although the options for accounting software for cannabis aren’t robust enough to handle all aspects. This is why we recommend keeping a log of everything and using Excel or Google Sheets for recordkeeping to all of our clients.
Your metrics allow you to focus on what works by putting the data on display. Rather than growing 30 strains with 25 unsuccessful, cultivators can concentrate on the five successful strains that dispensaries purchase. The same train of thought works for other cannabis operations.
Organize Your Books
As a cannabis business operator, having your financial framework and processes organized facilitates your success. Most of the time, this means hiring a CPA specializing in cannabis.
Cannabusinesses are under more scrutiny from regulators. These governing bodies are usually quite strict with their regulations, dishing out costly infractions without hesitation.
Section 280E makes it challenging for cannabis operations to deduct expenses. This is something that will continue until cannabis is reclassified. Cannabusiness operators cannot write off their rent, payroll, and other common business expenses – unless they have the right cannabis CPA organizing their books and structuring their entities.
Staying up to date on your accounting and finances is an excellent way to outdo the competition. Entities lacking organizational skills are at a financial disadvantage, which is why it’s always important to have your bookkeeping practices on point.
Need help managing your books? Contact us today to learn how your cannabusiness will benefit from our bookkeeping services.
Surround Yourself with the Right People
The right people will support your cannabusiness’s operations. Cannabis experts in various fields will understand what your business is capable of and advise you on sustaining and growing your operations while remaining compliant.
For example, the best cannabis CPA you can afford has the potential to enhance your business’s operations tremendously. This individual will offer value by saving time, energy, and capital that can be used to support the operation in other ways. Since each state’s regulations and taxes for cannabis differ, the right CPA will guide you, allowing you to avoid common errors you may overlook.
Experienced cannabis accountants and lawyers should be your operation’s first investments. Several other roles will guide your cannabis company’s decisions, including finance, marketing, valuation, and other areas. These team members and advisors will offer valuable insight when it’s most important, so it’s crucial to make hires you can trust.
As you look for a solid financial advisor, consider that individual’s long-term vision, as well as their background working with cannabis and planned strategy. What options have they considered? Is he or she only focusing on short-term results?
Advisors who think in the short term aren’t working for your long-term success. They want to work quickly without considering sustainable options that will support your long-term vision. Find people who plan to contribute to your vision and guide you in your decisions with expertise.
Have Cannabis SOPs in Place
We spoke about the importance of cannabis SOPs in the past. But communication and operational procedures are essential for success. Without a firm understanding of your processes, your business cannot operate effectively and efficiently.
Something as basic as purchasing procedures can be the glue holding your endeavor together. Accountability for important transitional tasks should be distributed among more than one person. This is possible through internal controls like signatures, dual-approval, and time logs for purchasing and cash handling.
Inefficiencies in your processes are a time suck, which is also a money drain. Don’t waste your time and money blowing through multiple bookkeepers without an effective system in place. Create SOPs for every aspect of your business where applicable.
Making Decisions for Your Cannabis Company
As you make decisions, know that they will impact your cannabis company’s success in one way or another. Acting, not acting, saying ‘yes,’ saying ‘no,’ it all directs the direction of your business. Simply put, it’s all in your hands.
By making the right choices and taking action, you’ll support your endeavor’s vision – and scale it to reach or even exceed your expectations. But keep in mind that the right team working with you should always be a priority.
Looking for the right team to support your cannabis company’s vision? Contact us today for expert guidance.