From start-ups to private equity-backed firms and all businesses in between, there are several scenarios where Outsourcing CFO Serices is the best way to address challenges that cannabis owners face. Circumstances that call for outsourcing the CFO function are varied but can include the following scenarios:
- Your business is taking off, and you have a lot of balls in the air – you simply don’t have enough time for budgeting, forecasting, and analyzing financial results.
- You know your customers and your services or products inside and out, but you’re less focused on dissecting the company’s financial side.
- You’ve raised some venture capital to expand your business and you need to update your investors about profit margins, operating costs and other key performance indicators, but you don't know how to put that together.
- While you have a bookkeeper, you don’t fully understand the financial statements they prepare. You’ve felt like you could use more in financial planning, but you’re not entirely sure what you need.
- You have a bookkeeper or controller, and you do not understand the financial statements they are preparing and presenting.
- The business is not performing as well as you think it should. An objective third party can help you understand where it is falling short and where action is required to turn things around.
Managing a business with inadequate financial information is like being given critical news scrambled or written in a foreign language. You need a capable translator to help you interpret the data and take appropriate actions. If you do not have that translator on your staff, an outsourced CFO may be the right solution.
Business owners make decisions every day, but they are not optimal if they are based on insufficient or incorrect inputs. The implications of faulty financial inputs can be profound, affecting profitability, market share, and access to capital. If your financial data is not well organized and presented, it is not as valuable as it could be. If you are getting inadequate or inaccurate information, that is even worse. No Cannabis company can survive in this day and age without knowing their numbers!
Outsourced CFO services add significant value to all types of businesses in numerous ways, including:
- Budgeting, forecasting, assessing long-term and short-term financing needs
- Suggestions for improvements in business functions and finance
- Assessment of the financial viability of new product ideas
- Analysis of pricing and cost structures to improve margins
- Evaluation of financial data capture and reporting systems, advising on debt/equity mix
- Preparing financial presentations for the Board or investors (e.g., pitch decks)
- Assistance with quarterly financial reporting
- Assist with banking relationships
- Analysis of M&A opportunities
You may have realized that many of the items on this list could be done more effectively in your business. Or, in many cases, a cannabis owner will simply have the feeling, “something isn’t right here.” It often starts with cash flow – your financial statements say the business is making money, but sometimes you don’t have enough cash on hand to meet expenses. The trigger might be a particular event that requires an in-depth financial analysis and takes too much of the CEO’s time. At the THC CPA's we're well positioned to be your CFO on a part time basis and help you the cannabis owner take these needed steps to help you grow your business to the next level.