Welcome to the new Gooey Rabinski Series at Higher Learning LV. This exclusive collection of articles is the soapbox for veteran cannabis writer Gooey Rabinski, who now writes for Higher Learning LV.
As cannabis markets expand and new states in the American Midwest come online with medical and adult-use cannabis laws, opportunity, it would seem, abounds. Yet the statistics for the survival rate of small businesses (in any industry, not just cannabis) are like something out of a Stephen King movie: 90-95 percent of startups will fail.
SOPs: Secret to Success in Cannabis?
SOPs: Secret to Success in Cannabis. This sobering fact doesn't mean that these walking dead will not or have not made money. But it means that they haven't demonstrated an ability to do so in a sustainable manner, particularly when markets tighten. Given roadblocks not suffered by other industries—including unusually steep tax burdens, Schedule I marijuana status, lack of insurance and merchant banking serves, severe advertising restrictions, and a slew of other unique challenges—cannabis companies need every advantage they can get to succeed.
A big tool and potential advantage is documentation. As a career-long technical writer and documentation specialist, I've seen inside the digital underwear drawers of some of America's most impressive Fortune 200 companies. The most successful invest significantly in development and maintenance of a comprehensive set of standard operating procedures, or SOPs.
"SOPs are one of the secrets to success. Why? Two main reasons: 1) Operational efficiencies and profit maximization and 2) exit strategy."
I've done the same for dozens of cannabis companies in North America. These pot companies hired me to build out some part of their documentation warchest. When not developing license applications for cannabis companies, I was hired to develop SOPs.
The Power of SOPs
I'm here to say that SOPs are one of the secrets to success. Why? Two main reasons: 1) Operational efficiencies and profit maximization and 2) exit strategy. Let's look at the ways in which a company founder can successfully execute upon an exit strategy. One of the most common exits is sale of one's company to a larger entity, often a publicly traded company.
If you're well managed enough to attract a potential acquiring party, that suitor will engage in a number of industry-standard steps involving plenty of lawyers and CPAs. After cursory niceties like letters of intent and non-disclosure agreements, the potential buyer will begin a phased effort of discovery. During discovery, the potential acquired party wanting to be purchased will be asked for a number of documentation artifacts, including the business plan and financials and all standard operating procedures.
"Companies lacking SOPs or that operate under incomplete or out-of-date collections run the risk of dissuading the interest of the potential buyer."
Companies lacking SOPs or that operate under incomplete or out-of-date collections run the risk of dissuading the interest of a potential buyer. Buyers have options and can instead purchase one of your competitors. The discovery phase is basically a gap analysis and audit. It does an inventory of documentation, particularly that required for full regulatory compliance. Sloppy documentation, typically a sign of sloppy operations, are heavily frowned upon by potential acquiring parties. In other words, they're often deal breakers.
Also: Companies that attempt to develop a full set of accurate and functional SOPs after solicitation from a potential buyer typically do not succeed. It is simply too large and important a project to cram into a week or two of panicked development.
Cannabis SOPs Should Be a Priority
Cannabis industry-best SOPs are those that are created and in force at the launch of a company. This allows real world operational metrics and other circumstances to influence the revision and expansion of the SOPs. This method of early adoption and regular, strategic updates of this documentation to match true operational parameters is the best way to possess quality SOPs. Any lower level of discipline and rigor will result in a competitive disadvantage.
"Lack of SOPs does not allow the precise analysis and correction of inefficiencies or inaccuracies in the operational parameters of a company."
While many companies possess SOPs only to satisfy licensing requirements or other regulatory rules, these critical documents should be among the crown jewels of their intellectual property assets. Procedures that are not documented necessarily exist only in the minds of one or more employees. This approach does not allow the precise analysis and correction of inefficiencies or inaccuracies in the operational parameters of a company.
Nor does it satisfy the requirements of legal counsel during the discovery phase of a potential M&A deal.
Higher Learning LV's SOPs
One of my tasks at Higher Learning LV is the development and maintenance of its collection of standard operating procedures. This is a priority for the company based on its goal of creating and maintaining a truly premium on-demand cannabis training and education brand.
"When running your operationally efficient and well documented cannabis company, look to Higher Learning LV for all of your training and education needs."
At Higher Learning LV, we peddle in on-demand training and education for industry professionals and enterprise organizations, not free business advice. But here's something you can take to the bank: If your marijuana or hemp company does not currently have a robust, current, and accurate set of SOPs, put this task at the top of your priority list.
Or you, too, will be among the walking dead.
And when running your operationally efficient and well documented cannabis company, look to Higher Learning LV for all of your training and education needs. Just like a polished set of SOPs, Higher Learning LV's seminars and courses will help you succeed during tough times.
— Gooey Rabinski
Enrollment is now open to students and enterprise clients in the Cannabis for Anxiety seminar from Higher Learning LV. This is the third seminar from this new disruptive training and education company, following the popular Cannabis for Cancer and Cannabis for Pain seminars.