1. Reconsider Corporate Structure:
Is the entity type right for your business? Are investors indicating different preference (e.g. a corporation instead of a limited liability company)? Consider changing things up this New Year, subject to compliance considerations and limitations around permits and licenses, to align with general preferences and limitations on liability for cannabis businesses.
2. Ensure Written Policies and Best Practices are in Place:
Make sure there are written company policies and written best practices in place to share with employees to help ensure regulatory compliance and other legal compliance, including with respect to labor and employment matters and practices. This also may help in the event of audits!
3. Review Employee Efficiency/Set Incentives Early:
Review employee efficiency matters and set goals and incentives for employees early in the year, as well as setting review periods to review progress. This can make a difference in measuring performance and creating an efficient and focused workforce, which is key in this financially challenging industry.
4. Get Involved in Local Organizations:
Consider joining trade organizations and groups that are active and involved in making a difference in your local industry community. This also expands business networks and allows business owners and representatives to create aligned goals empowering the industry.
5. Eliminate Unnecessary Spend:
All businesses must be cautious of any and all unnecessary spending. While it’s a difficult thing to reduce an employee workforce, consider whether each role is a necessary one and weigh the costs and benefits. It’s a time where the cannabis industry especially, due to underperformance, is being forced to consider a more lean, efficient approach to operations, especially for startups with expensive build out and regulatory costs.
6. Revisit Financials:
Revisit forecasts and budgeting plans (in light of past year performance) and review with the boards and managers of the company. Taking an additional look, rather than avoiding controversy, is always better than later underperformance. Review and review again any and all financial forecasts and budget projections for the New Year.
7. Prepare a Backup Fundraising Plan:
Prepare a fundraising plan so it’s ready when the need hits- it can happen any time that a company needs emergency money. Prepare a term sheet for a debt or equity financing that is ready to share with little notice and modification of context.
8. Review SOPs:
Review standard operating procedures and ensure they align with written best practices and policies and applicable state and local regulations for licensees.
9. Boost Morale:
Create a company event or group meetings or events to promote team-building and boost morale. Statistics show that fostering an inspired workforce creates a more efficient workforce.
10. Facilitate Feedback:
Create an ability for anonymous and safe upward reviews as well as reviews of support staff. Giving a voice to all participants in the workforce community makes for a more effective professional atmosphere, including creating openness, transparency and communication which each are key to corporate success.
11. Cleanup the Corporate House:
Review what’s been papered verses not and get caught up on what’s incomplete, messy or that which needs correction. Corporate housekeeping should be done regularly and at least bi-annually to ensure things that require papering under the law are not kept at bay. Cleaning up later (in the context of a financing or a sale of the business) can prove much more expensive and can turn off interested parties.
12. Focus the Marketing Plan:
Consider upcoming events and the marketing plan. Review actual results from the prior year and revamp the marketing plan as necessary, reducing spend on things that have not proved profitable in the recent past.
13. Ensure the Capitalization Table is Up to Date:
Do you have a written capitalization table based on papered share issuances? If not, prepare it and ensure you have the backup paperwork to tie out your cap table. After-all, it’s crucial to know who owns the company, other than just a verbal unenforceable agreement. Equity needs to be issued and paid for.
14. Accounting and Tax Review:
Revisit your prior year accounting and looking at the books for gaps, concerns, losses and places where the company can improve. Look at whether the bookkeeping has been robust enough and where it lacks. Ensure these issues are corrected in the New Year by creating a checklist for improvement and working with your CFO to ensure these are addressed.
15. Check on Filings:
Have you made all necessary securities laws filings and filed statements of information? Check on any and all applicable and necessary filings and get cleaned up on any opens.
16. Review Reporting Obligations Tied to Licenses and Permits:
Review regulatory reporting obligations and make lists to share with employees so that they can help you stay compliant with regulatory obligations. See this other blog post where I reference various subsets of reporting obligations:
17. Take a Vacation:
Everyone needs a break. If the holidays didn’t provide that, plan a reset ahead of time to ensure business matters are covered and prepare a checklist of open matters for the person(s) stepping in to cover you.
18. Review Your Legal Opens:
Close out opens that are dragging on and costing money by virtue of delay. Procrastination comes back to haunt companies.
19. Protect Your Intellectual Property and Confidential Information:
Have you filed for trademark protection/registrations? Have your employees all signed confidential information and invention assignment agreements? Are you signing nondisclosure agreements when you should? If not, get some template forms for these things (and make sure you understand how to customize them) and work with service providers to advance along registrations.
20. Set Short-Term and Long-Term Business Plan Goals:
It’s not too early to look into the years beyond 2020. Consider creating a three-year and five-year general business plan, which each can help focus the short-term annual plan.
At Rogoway Law Group, we are happy to assist with many of the above suggestions. We assist with both legal and business-legal matters and our corporate team has sat in many board rooms to see the issues that can arise in connection with the above suggestions. We are here and available to discuss any concerns and plans to help make businesses run smoothly in the New Year. Happy New Year!
