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Looking back on one of our most-read articles of all time, "7 Financial Fundamentals for Business Success," we wanted to share several tips that still resonate today (perhaps now more than ever, considering how large the cannabis market has become).
Here are 11 tips to make sure you keep in mind as you develop your licensed cannabis business. And we've added five things to avoid, since traps lie in wait throughout this industry.
How many of these checklist items are you and your team actively pursuing?
Do
- Define your business model and objectives.
- Determine your niche in the market.
- Set long-term goals now (for example: do you want to scale up?) and plans for achieving them.
- Evaluate all product and market decisions relative to whether they fit in with your model and will help you achieve long-term goals.
- Track and analyze key statistics that can help you pinpoint inefficiencies and drains on profitability, as well as increase your investor appeal.
- Evaluate market trends in your region(s) and whether you are providing products that are not driving revenue and profits.
- Hire the best CPA and lawyer (with experience in the cannabis industry in your state) you can afford, whether outsourced or on staff.
- Look for financial advisors who plan for long-term success.
- Have purchasing and other “paper trail” procedures in place, so all costs and receipts are accounted for.
- Prepare best- and worst-case financial scenarios. If you have a worst-case scenario in place (for example, if prices drop to rock bottom), you can prepare your business ahead of time for dealing with them.
- If seeking investment money, ask for more than you need so that you have a “cushion” and will not risk having to shut down if you run out of money too soon.
Don’t
- Produce random or too many products for your company to sustain; instead, sell what there is market demand for.
- Ignore the importance of setting up the best type of business entity from the get-go.
- Base business decisions on only certain statistics (revenue, for example).
- Set aside the crucial business-management aspects of your business (financials/recordkeeping, budgeting, data tracking and analysis, HR) because it’s not your area of expertise. Seek outside assistance or fill the positions when you can.
- Hire financial advisors with short-term vision only.
