“Getting to know other
people in the industry
will help you get the
right people on the
bus. ”
THERE are four decisions every entrepreneur must get
right—People, Strategy, Execution, and Cash. As I explain
in my book, Scaling Up, every business that starts to grow
needs to attract and keep the right People, create a truly
differentiated Strategy, drive flawless Execution, and have
plenty of Cash to weather the storms.
That’s just as true in the cannabis industry as in any other.
So how do you apply the Scaling Up system to a cannabis
business? Here are some suggestions that will help you,
whether you are a grower, a processor, an owner of a testing
lab, a provider of secure transportation, or a dispensary
operator.
People: With the Michigan Marijuana Legalization Initiative
expected to put recreational use on the ballot in Michigan in
November 2018, there’s a good chance competition in this
space will be heating up. Many people with money to invest
will want to get in on the action.
Having the best people on your team will be a big advantage
— if you can attract them. Given that the legal cannabis
industry is relatively new, you are likely to find there is a
scarcity of talent, whether you are looking for a bookkeeper
who knows the ins and outs of the industry, a grower, or
another pro with specialized expertise. In California, bidding
wars have driven salaries up, and that is likely to happen in
Michigan, too.
Getting to know other people in the industry will help you
get the right people on the bus. Becoming active in a group
like the Michigan Cannabis Development Association can
make it easier to make the connections you need. The time
to start getting to know potential hires is long before you are
ready to start recruiting.
Also mission critical: Building a strong culture that attracts
great people and makes them want to stay. That starts with
managing your team well. Take a page from parenting and
establish a handful of rules, repeat yourself a lot, and act
consistently within those rules.
Setting core values for your business can help with this.
They don’t have to be complicated to be effective. A value
like “Be kind” can go a long way. If the values are discovered
and used effectively, they will guide all of the relationship
decisions and systems in the company.
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Strategy: In setting Strategy, take a cue from the great
business strategist Gary Hamel. You will know you have a
real one if it passes two tests: First, what you’re planning
to do really matters to enough customers, and second, it
differentiates you from your competition.
Even if you’re certain what you’re selling matters to your
customers, standing out from competitors is going to be
increasingly important as more people crowd into the
cannabis industry. Let’s say you run a dispensary. Think
about the vibe you are going to create for your customers.
Is it going to be like a Starbucks coffee shop or a low-cost,
high-volume, no-frills environment? The companies that
try to be all things to all people are going to struggle. Those
that pick one thing and do it well will survive and thrive.
Execution: Your strategy will only help you scale up if
you act on it. It helps to be organized about it. I recommend
setting a handful of priorities for each quarter and the
whole year with your leadership team.
Gather data daily to make sure you are moving toward
your key goals and review it weekly to guide your decision
making. If you’ve run your business in an informal way,
tracking key metrics in your business and measuring your
progress may feel odd, but once you start doing it, you’ll
be amazed at how knowing where you stand helps your
business grow.
If you’re not having regular meetings, try establishing
a daily, five-minute huddle with your team, where you
talk about your key priorities for the day so everyone
is informed. It’ll save you hours of time by preventing
miscommunication later.
Cash: Finally, in managing Cash, don’t run out of it! This
means paying as much attention to how every decision
affects cash flow as you would to revenue and profitability.
The Cash part of the equation is a little more challenging
in the cannabis industry than it is in other fields. Finding
a bank that will work with you is not easy, so on top of the
normal challenges of managing your finances, you’ll also
need to deal with the inconveniences of operating a cash
business. That can lead to sloppy habits when it comes to
tracking revenue.
With the industry becoming more regulated, it will be
hard to hide if you’re not keeping good records and paying
the taxes you owe. Now is the time to get in front of this
challenge and put good systems in place. Invest in good
accounting software and an accountant who knows what
he or she is doing.
The cannabis industry is unique in many ways, but in one
respect, it’s just like every other one: The basic rules for
scaling up are the same. Once you master them, you’ll be
surprised at how much easier it is to grow your business—
and achieve a nice return on your investment in it.
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