My background has always been deeply involved in how organizations utilize and engage with their non-employee workforce. The concept of replacing internal talent for fractional talent for an organization was familiar, yet new and refreshing, considering I’ve had conversations with cannabis owners and operators that have said they absolutely abhorred outsourcing office functions as a service. Specifically, I’ve learned that a strategically run outsourced financial service function has advantages in enhancing an organization’s overall bottom line.
A quality outsourced function can not only remove the time to source and hire an in-house team, but it can also provide significant cost savings and efficiencies for an organization. Even the overall experience itself can demonstrate to a cannabis operator how the back office function can be better scaled.
So, what is a Fractional Finance Team or Fractional CFO services? Northstar’s Fractional CFO service is an outsourced finance team function that allows a vetted and dedicated finance team to manage an organization’s finance department while helping to define its accounting needs. Fractional CFO services can ensure organizations find, engage, and retain a dedicated finance team, no matter the size, at the right time, and at the right price.
There are several key areas that directly impact the success of a Fractional CFO services function:
Having executive buy-in is instrumental in ensuring that any service function gains the momentum needed to be successful. A Fractional CFO services function must complement an organization’s overall strategy and make it easier for the organization to meet its goals in order to have executive buy-in. Executive buy-in, typically seen as coming from the cannabis owners and operators and their leadership teams, allows for communication to start from the top and reach all levels of an organization ensuring alignment on the desired outcome. This is especially critical when having multiple retail and cultivation sites.
Process Documentation and Improvement
In most cannabis businesses, there is a semblance of a process for how the back office functions, as well as how the hiring team finds and attracts talent. This includes how a business finds, onboards, and trains its talent, and in most instances, this process is managed by a small group of individuals that are relied on for everything to run the back office smoothly. Whether this process lives with the business owner, an HR person, or a dedicated Talent Acquisition team, experience shows that most of these teams are one individual or a small group of people. And when we’re talking about wanting best-in-class finance professionals, that hiring process can be daunting, slow, and expensive. Allowing experts to come in and map out desired finance strategies and processes provides insight and alignment to everyone within your business.
Time to Hire
For typical cannabis businesses, I’ve seen finance position vacancies that have been open for 200+ days. Most of this time is likely due to the position being niche and hard to fill, but 200+ days means work is not getting done and revenue is being impacted. Through industry experience and having a bench of top performers, an experienced fractional CFO team can easily step into those hard-to-fill roles, as well as offer insights and actionable solutions on how to improve all back-office functions. This reduces the time to bring in a specific finance function or an entire dedicated finance team. A fraction of the cost and a fraction of the time.
Finance Teams and Support Teams
A successful Fractional CFO services function should be split into two main teams. Team one consists of the finance team that maintains the day-to-day relationship with the cannabis business’s operators, builds trust, and understands the full scope of what the business intends to accomplish. This trust increases the understanding of what the business operator needs to accomplish in the future as well as what the Fractional CFO services function needs to accurately forecast and anticipate potential risk. Team two is a dedicated support team that ensures all services are being performed as expected, transparency and communication, as well as provides backup support in the event of a need to scale without disruption in business. The support team can actively engage with the finance team while also engaging and maintaining contact with the business operators for any potential future needs and requests.
Administrative support is critical to a successful Fractional CFO services function. Typically, companies will have their own HR and People Services teams that will manage most of the day-to-day tasks involved with hiring, but additional administrative support for repetitive coordination tasks — such as interview scheduling and offer letter generation — goes a long way in creating efficiencies and scalability. With a fully dedicated administrative team, you can ensure clear communication when needing to scale a team up, seamlessly plug teams in, and ensure swift process understanding. Meanwhile, cannabis operators and teams can focus on what they do best and be more productive in those areas.
Value and Cost Savings
It’s no secret that value and cost savings are always at the top of the list when considering implementing any new program. But in reality, the actual cost savings are often difficult to quantify. For instance, with an outsourced finance function, the immediate cost savings are found in time reduction from the internal staff relinquishing the talent acquisition duties of finding a full-time finance professional, let alone an entire team. The reallocation of duties include posting to job boards, and sourcing for candidates through tools like Vangst, LinkedIn, and FlowerHire. The ability to drastically reduce the amount of spend going toward recruiters can also increase cost savings as it’s likely that the number of staff will continue to increase with the maturation and growth of your business.
Metrics and Reporting
How do you know if the Fractional CFO services initiative has been successful if nothing is measured? A best-in-class Fractional CFO services function brings a plan as well as management of program governance, continuous improvement, and service assurance. A successful Fractional CFO services function will:
- Drive management of tasks through a tracking and reporting mechanism while managing outputs to demonstrate the delivery of tasks.
- Ensure adherence to the program through operational governance and proactive partnership with an organization’s leadership and operating teams.
- Provide continuous improvement by supporting the business with relevant market data reports and analytics. This includes performance metrics on the relevant market, competition benchmark data, and trend analyses.
In this new era of cannabis, worker shortages, remote work, and attracting talent for in-demand jobs are more important than ever. A Fractional CFO service exists to ensure the right talent can be engaged quickly, at the right time, and at the right price. Relationship management, dedication, and passion for the craft, along with a drive for success allow Northstar’s Fractional CFO services function to provide cannabis businesses the ability to meet and exceed all their strategic growth objectives.