Starting up is hard. Starting up a successful business in the cannabis industry is even more challenging because of a highly competitive marketplace, high barriers to entry, constantly changing regulation, restrictions to banking and access to capital, and punitive taxes and regulation.
80% of businesses fail within the first 5 years of operations due to poor strategic, financial, and operational decisions. Cannabis business face a much higher chance of failure. My goal is to disrupt the norm and coach startups to be in the 20% of successful organizations. Here are five tips to building a stronger startup environment.
1. Perform an Organizational 360
Startup life is notorious for long nights, limited cash, a lack of formal meetings and communication, and a constant sense of urgency. If it's getting a new product to market, trying to close your initial seed round, or just meeting a big order from your new customer - there are endless reasons why there may be chaos and a constant sense of urgency. If that sense of urgency and chaos is more of a constant than an outliner, it's time to re-evaluate what's working and what's not through an operational 360.
An operational 360 should not be confused with once a year frequency. An operational 360 should be done at least once a month.
2. Re-build that Business Playbook, because it's not all Fluff
A business plan isn’t just a template to present to an investor, it is the strategy behind your Company and why your Company adds value to the market. It details out how you will sell, distribute, and market your business. Many companies forget their strategy or fail to re-assess their strategy. Are your actual customers the same segment you defined in your business plan? Are the habits consistent with your initial hypotheses and assumptions? Should your sales and marketing strategy change?
During your first few years in business, you should be constantly assessing your business plan and tweaking if necessary. Your marketing, sales and operational plans should be based on your business plan. No one has a crystal ball, especially startups, but defining where you want to go, for-seeing blockers and assessing the market are essential items in your tool box.
3. Nail that Value Proposition down and train the team
Are you communicating your value to your customers and has your company defined its value proposition. If you have multiple products do you have a unique selling proposition? Sales is one of the most underestimated and under-scrutinized metric for many founders.
A value proposition is accurate and a clear and the unique identifier that distinguishes your business from the saturated marketplace. Make sure your employees and managers know what the value proposition is and can clearly communicate your organization's value to your Customers.
4. Be the leader you want to follow
People matter and will drive your business to the next level. If you want to build a sustainable business that can live without you, your team needs not only to understand what their roles and responsibilities are, but they need to feel empowered and part of the team.
They need to understand the mission of the organization and care deeply about their role in the organization - not only as a driver to growth but a driver to achieving the mission. They need to have goals, upward mobility, and role clarity. Your team is the driving force behind momentum and scale - if they are feeling unappreciated or undervalued or unclear of what they are supposed to be doing - that's on you. Investing in leadership and team building can do wonders for an organization.
5. Build internal processes that make things faster
A filing system that worked for the owners of the company might not work for a team. An excel list to manage finances might not still work when you have multiple locations. Assess how you are managing clients, keeping track of orders, managing projects and meeting internal and external deliverables.
More importantly, assess your meeting and people processes. One lure to both the startup culture is that it is not like “Corporate America” and more relaxed. This also can quickly translate to zero accountability in the organization, unclear rules and responsibilities. Implementing organizational governance tools can help create the right amount of structure for your organization to thrive. Remember, there is a fine balance between control and efficiency, make sure your organization understands this!
I’m a firm believer of strategy and constant improvement. We are in the digital age and our ecosystem is constantly changing. To be that 20% of successful business, a methodical, detailed, and FUN regiment should be deployed. Company's that have a strong value proposition, a clear strategy and are focused on cash and operational strategy are setting themselves apart from the pack.