- Know Your Stuff. It’s crucial that you come across as competent, professional and knowledgeable. For sophisticated investors, knowledge about the business doesn’t mean only knowledge about the product and the brand; it’s likely to also encompass knowledge regarding the business plan and vision, the corporate structure and capitalization, as well as financials and forecasts.
- Be Succinct and Distinguishable. There’s a reason people talk about an “elevator pitch.” To be effective at initially pitching your business, you need to hook someone’s interest within the time it would take to have a brief elevator ride. Therefore, being clear and concise on what sets your business apart from the rest might make the difference between turning off an investor or acquirer, or hooking them on a first impression. Be ready to describe the business in a couple of punchy, meaningful sentences. These sentences should not only give a general sense of the business, but they should sum up how your business is a valuable proposition.
- Refine the Pitch Deck! Pitch decks often are too long, too generic and too focused on overall industry metrics. Fine-tune what’s in the deck; reduce the noise and clutter. Imagine the busy business person reading from the other side. What are the key highlights? What sets your business apart from others of the same or similar type? Most savvy investors know the industries they are exploring so don’t spend too much time describing why cannabis is where it’s at, or why distribution, cultivation, manufacturing, etc. is where it’s at. Instead focus on what makes you the outlier (distinctly valuable).
- Network and Leverage Commercial Relationships. The more you know about the industry, the competition, and the marketplace and the more connections you make, the more salable you are, the better instincts you’ll have on what’s working and what isn’t working in the industry and the more informed you will appear to investors and entrepreneurs. Additionally, you can create relationships of value and commercial relationships through these networks that may undercut or be stronger than those of your competitors. These unique commercial advantages are value adds visible to potential investors and acquirers.
- Take Care of Capitalization and Be Diligence-Ready. Make sure your cap table is clean, clear and papered; be sure to track all equity issuances, all debt instruments and any promises of equity and be sure all of these are backed up by appropriate paperwork evidencing them. Be ready for overall diligence–the next step when you’ve hooked an investor or acquirer. Before any significant money exchanges hands, many questions are likely to be asked and paperwork will be requested. Being ready to produce that diligence quickly and efficiently can set you apart by showing that you have your act together. This implies that you are a less risky proposition because your business practices are tight (and not messy). For a primer on diligence see my other blog posted here: Anticipating Due Diligence For Cannabis Industry Transactions.
- Tie up Loose Ends! If there are small problems to solve, don’t ignore them! Clean them up and nip them in the bud (pun intended). If there is a disgruntled employee or consultant or a minor disagreement between parties around equity or otherwise, address it sooner than later rather than sleeping on it or hoping it goes away. Conflict is uncomfortable, but it can become very uncomfortable when it escalates and comes out of the woodwork years after you thought it was gone for good (we see this a lot). These “minor” disputes may start out minor, but often end up major when the company advances along and starts earning real profits. Small issues can come back to bite you, so don’t assume the past is in the past unless you’ve settled out your disputes (big or small) in writing.
- Have Fun! The more passionate you are, the more likely you are to succeed. If we go through life thinking “we have to do this”, the results flowing from that belief are likely to be drab. If we go through life thinking “we get to do this”, the positive results will flow more smoothly. Running a business is not without risk or exhaustion, so being passionate about what you’re doing can help you commit to putting in the time, energy and dedication it takes to truly succeed and not burn out.
- Surround Yourself with Competence and Consider that Compensation Drives Performance. You and your business are the product of the team you build. Your business needs competent executives and service providers to succeed. Businesses need the ability to designate responsibilities to scale in a meaningful way so that founders aren’t saddled with doing everything themselves. To assure that the things you designate to others are done correctly often means being willing to sacrifice a bit – maybe be willing to pay extra to secure a dedicated and competent workforce and to keep the workforce happy, motivated and incentivized. And don’t forget to conduct appropriate or applicable background checks on key executives or “owners” of the company, since certain backgrounds of “owners”, as defined in the applicable code, can risk forfeiture of company cannabis licenses.
- Use Resources (Accountants, Tax Advisors, Legal Counsel, etc.). One of the biggest mistakes is trying to do everything in house. Most startups are not familiar with the legal and/or business-legal issues that are key to building a clean foundation for the company. Often the focus is only on product, services development and commercial arrangements causing certain very important foundational items to be overlooked. This oversight can cost more money in the long run than if you get some simple inexpensive advice at the start. Hiring the right accountants, tax advisors and legal team can make all the difference in the world and can save your business money. We are here to help.
- ACTUALLY, HAVE FUN! I know I mentioned this already, but the most convincing pitch is one that comes from a happy, knowledgeable, driven and excited mindset.
Key Legal Considerations for Breweries, Part II: Labor and Employment Matters
Rogoway Law Group
May 20, 2024
Introduction to Labor and Employment Issues in Breweries All startups face challenges, but certain recurring issues are especially important to address at
