It’s Time to Combine Business Know-How and Cannabis Expertise
Let’s face it: Cannabusinesses are in a complex industry. It’s evolving, challenging and state-specific. The fact that it continues to remain federally illegal is keeping some qualified professionals out – they’re taking a “wait and see” attitude before jumping in with gusto and bringing their talents and expertise to help these companies achieve success. Herein lies the knowledge gap.
Where does this leave cannabusinesses that are trying to navigate their way through the complexity? Some are fumbling. But all of them are first and foremost a business, and they have extensive needs. At the most fundamental level, a solid business and financial foundation is even more important for cannabis companies because of the complex nature of the industry.
Cannabis Knowledge + Business Knowledge = Success
A shared understanding and mutual passion matters—and those brave enough to enter the world of cannabis with intention know this. The maturation of the cannabis industry means that excessive valuations and hype are things of the past, and business fundamentals are at the forefront. Cannabis is not easy money. It is hard – really hard. Margins are thin, prices are dropping, and while the top-line outlook remains rosy, the bottom line and cash flow are in a pinch. This is a situation where the best minds need to come together to have a deep understanding of what is driving the business strategically and find a clear path forward.
Keep Your House in Order
Knowledge is power. If you don’t have confidence in your numbers being timely and accurate, know what they mean, and know what levers to pull to make them better, then the future of your enterprise is at risk. In addition to paying the bills, collecting what is owed, and meeting reporting requirements, you also need to know your bottlenecks and have an executable plan for addressing them. What is your cash runway? Can you hire the talent needed to make your operational plan work? Have you evaluated your capacity constraints and supply chain? How do you stack up with your operational metrics? Do you have the right operational metrics in the first place?
While these fundamentals are important for any business owner, they are even more critical in the cannabis industry. Banking is more challenging, capital is more expensive, taxation is high, insurance is hard to come by—all of this leads to a high-risk environment. Mistakes have an outsized impact in the cannabis industry and can easily make the difference between success and failure. Keeping tight internal controls and proper operational procedures in place are paramount—and expected. When Ben Franklin noted that “an ounce of prevention is worth a pound of cure,” he could have been speaking directly to the cannabis space!
Choose the Right Partners
One of the biggest challenges for entrepreneurs is how they allocate their time. Too often, when a business scales, business owners spend more time on tactical activities and less time on strategic activities—which is exactly opposite of where they need to be.
There’s a more effective way to keep your time and attention ON your business, rather than IN your business. Partnering with the best finance pros and other business experts who are dedicated to the cannabis industry would reallocate how you spend your time. It would also help you build a strong partner ecosystem, expanding your network of professionals to tap into when the need arises and reducing the risk of not being able to handle the unexpected.
I often hear the cries of “I can’t afford it!” and the truth of the matter is that you cannot afford to NOT have a solid bench of professionals ready to act. A strong bench of cannabis business professionals at your fingertips can help guide you to greatness and be an integral part of your team exactly when you need them.
Close the Knowledge Gap
The knowledge gap can be bridged by looking to the world of successful business professionals for assistance. They’ll bring best practices right to you, that can be adapted to your unique company. They’ll help you learn to speak the language of business that will resonate with investors. And they’ll help your company start to work smarter. To do otherwise is a risk you can’t afford to take. Other industries have realized the benefits and cost efficiencies of leaning on the experiences and expertise of other business experts, and it is well past time for cannabusinesses to use these tools as well.
Fortunately, some business-focused firms, such as Kukuza Associates, are already in the cannabis space to address the knowledge gap crisis. By being able to lean on the experiences of our pros, your company can avoid pitfalls, leverage cannabis-specific best practices, and take advantage of opportunities that you wouldn’t be able to all on your own.
Whether you’re looking to solidify your financial foundation or take your company to the next level with CFO guidance, Kukuza can be your expert team, ready to jump in to address your exact needs. Contact us today to tell us about your company.
Eden Jones is a CFO consultant at Kukuza Associates, helping companies of all sizes in all segments of the cannabis market. She previously was CEO at Otrera Enterprises and held the CEO and CFO roles at Atlantic Shores Cooperative.