Story by Cynthia L. Finkenbinder, CPA
I was watching Pixar’s short One Man Band, the other day with my granddaughters. It is a story of two street musicians. Both have a variety of instruments strapped to themselves—from drums, bells and cymbals, to horns, whistles and violins. The two performers are competing for a little girl’s coin. Of course, things get out of hand as the two musicians try to one-up each other, and the coin falls down a grate. The child demands that they give her something for losing her coin. She takes one of the small violins, tunes it up, and starts to play.
To the dismay of both musicians, she collects more coins from passersby than either of them did while they were trying to outdo each other. What intrigued me was that she took the time to tune the one instrument and played it well, while the other two were trying to do everything and didn’t even take the time to make sure their instruments were properly tuned.
As a CPA, I often see this happening to new business owners. They run around trying to do everything themselves: from cleaning the bathroom to creating the product to selling that product. They forget to take the time to tune up and concentrate on what they do best.
It’s easy to get caught up working in the business and not on the business. What is the difference? Working in the business is when you do things such as bookkeeping, budtending, tracking inventory—all of which need to be done, but could be delegated to others. Working on your business is when you do research or development on the next new product, figure out the strategy for selling that product, meet with a potential business partner or work on the overall strategy for your business.
This is where a team comes into play—we all need people on our team—even it if is just someone cheering us on. Building a good team is one of the most important things any business can do. It is especially important for cannabis businesses, because the industry is so young that there are no models to follow, and there aren’t many mentors to provide guidance.
Where Does a Winning Team Start?
The first place to start is with yourself. What skills and talents do you bring to the venture? Are you good with sales, growing, researching, developing products, marketing or accounting? Do you have a patent or product you invented or are you a big picture guy who needs someone to figure out the details?
You also need to evaluate your weaknesses. If you can’t boil water without burning the pan (yes, I have done that) then you might not be the best at making edibles. On the other hand, you might be the best one for writing down the procedure—refining it and making sure everyone follows the same recipe so your product is the same every time.
It’s OK I’m with The Band
Every team needs a captain. This should be the business owner but sometimes it is a manager or another employee. Next, you need a drum major (the conductor for a marching band). This person will direct everybody else so the captain can concentrate on the business. A good person to fill the drum major role is the CPA or CFO (chief financial officer). That person’s job is to coordinate everyone else and, more importantly, to oversee the finances so you don’t get down the road and run out of money. He or she also makes sure that internal controls are in place and proper procedures are followed. In a cash-intensive field such as the cannabis industry, this person is essential to make sure at the end of the day that the money is still there.
You may have other partners or investors. You’ll want to evaluate not only their skills, but also their availability and passion for the business. Some will just want to invest money, and won’t want to know anything about the business other than how they will get their money back. Others have the talent and time but don’t have the money to invest. Don’t write those people off, because they could be what keeps you on track, and they may have the best ideas to build your business.
OK, So Who Else Needs to Be On My Team?
Once you have this person on board and excited about your business, you need even more team members to keep everything moving forward. Such people may include a great attorney who knows the laws for your state and understands that you are working in a business the federal government sees as illegal. You’ll also need an insurance agent, a marketing professional and a security consultant. You may need to add others to your team, as well. These can be either employees or outside consultants.
This Is Supposed to Be a Paid Gig, Right?
How does a startup get all these people to work in their business and not break the bank? Most consultants will give you a free one-hour session so you can determine whether they will be a good fit for you and your business. Just as you probably would not get married on the first date, use that same principle when hiring—whether asa consultant or an employee. You’ll also want your team to work together efficiently so it is a bonus if they get along well with each other. Don’t overlook the retirement community—they are often looking to share their expertise. Yes, this is a young industry, but a retired farmer or business owner may have lots of insight into your business.
Most consultants will want to be paid for their services and should be. However, because this is such a unique business, it never hurts to ask if they would be willing to let you take them to dinner and learn from them. Others are so passionate about this industry that they may be willing to give you some of their time just so they can be involved. Those businesses that operate as nonprofits can also ask for volunteers; but remember that in most cases you get what you pay for. You want to pay those consultants who will be most beneficial to your business. Remember that most of the time this is a business expense that cannot be taken as a deduction on your federal taxes.
Building a successful business is a daunting task that takes teamwork. No one can operate effectively as a One Man Band. With a team behind you, you never need to be alone—which is a good thing.
Cynthia L. Finkenbinder, CPA is the owner of Alpha Omega Accounting, LLC in Northern Colorado. With clients in 21 states and three countries, she is an expert in 280E compliance, accounting and multi-state taxes. Feel free to contact her if you have any questions or would like us to address your question, or are in need of her professional services, at firstname.lastname@example.org or visit her website: http://alphaomega-acct.biz.