The idea of value can be a tricky and very misunderstood topic for accounting professionals and CEOs alike. Determining the services that you want to offer and what to charge for those services is the key to building a successful, competitive practice that will create the most ideal scenario for accounting professionals: to work remotely and under less stress, command higher fees, and have more freedom to work as you see fit. The key to understanding your value is to first understand the difference that your services will make in your clients’ business, and how to communicate it to a CEO so that they understand the level of service that you provide and how it will be a catalyst for their business growth. You have to realize your potential value first; otherwise, you may run into trouble getting and retaining clients - or, in some cases, trouble being compensated fairly for the value that you are providing.
Being a booming and relatively new industry, knowing the ins-and-outs of all aspects of cannabis business is where you will provide the most value. The cannabis niche for accounting professionals is one that not only requires understanding the strict and ever changing accounting rules, but also becoming an expert in the industry as a whole: how it’s grown, taxes, legislative issues and changes, operations, risk, etc. Being an expert in the industry, having World Class systems in place, and being available to your client will be the greatest factors in reaching your goals.
As an expert in cannabis accounting, you advise CEOs as to what they can expect to accomplish if they work with you, and also what negatives will come if they don’t retain the support of an expert. There are a number of huge risks involved with operating a business in the cannabis industry, and you will need to guide them through those dangers with your knowledge and expertise so that CEOs and investors are protected. This is extremely valuable to CEOs, as they may not understand the repercussions of their negligence or even what they don’t know about cannabis tax laws and being audit ready.
Having World Class systems in place to protect their assets and maximize fiscal efficiency are also huge ways to show your value to CEOs, including having a month-end system and perpetual data room that stakeholders can review and reference. A few ways that you can help CEOs maximize cash flow are minimizing taxes via tax planning (following 471 is one great method), and by providing real tools to maximize ROI on their marketing, useful cash forecast tools and analytics, dashboards, and budgeting mechanisms.
Protecting cannabis businesses from loss is another great way to showcase your value to CEOs. What is the value of surviving an IRS audit 5 years in the future? What is the value of protecting CEOs from a lawsuit from an investor? What is the value of helping cannabis businesses remain compliant with lenders, the State, and other regulatory bodies?
You must convey that the cost of compliance is worth every penny!
You can also create a Summary of Accounting Policies and Controls with your client to help improve their company and to ensure that everyone is on the same page as far as how to manage financial matters (cash, insurance, inventory, etc) so that no one gets in trouble. Many new cannabis business owners are transitioning from the grey/black market to become legally licensed entities. And with that, there is a new set of rules that these businesses need to follow, or else it can lead to problems for them and their investors that could easily be mitigated if there was some sort of oversight and systems in place on financial matters.
The value that you add to your clients’ businesses doesn’t always provide immediate results. The processes involved with cannabis accounting take time to complete in order to be thorough to make sure the business is set up for the long-haul.
For starters, CEOs need access to good financials on a quick and consistent basis which include monthly financials, dashboards, metrics, and forward looking cash forecasts. They can use this info to help make key decisions in running the business and maximizing cash flow in the “here and now,” all while keeping them compliant with government agencies, the IRS, investors, and lenders. If you have the right systems in place, you can make sure that your clients are in fact audit ready for when the IRS reviews the financial records.
On an annual basis, we recommend that accounting professionals provide tax planning, budgeting, and other value-add activities, like ROI on marketing for example. We also add value to our clients by trying to support any required reporting for lenders, investors, or auditors so that we can reduce the stress on the CEO, as well as increase the net worth of the company.
Planning and setting a cannabis company up for the future is also highly important. If there is an audit, the CEO will have fewer worries when the IRS arrives, as they have a world class accounting team in place. They can rest assured everything is tied out, accounted for correctly, fully supported, and instantly accessible. Or, if the CEO plans an exit, they will be able to get the highest valuation because cannabis accounting experts understand the importance of maintaining proper records, adhering to GAAP, and other compliance rules as well.
Simply put, you provide World Class service that offers the expertise needed by cannabis companies. Even if a potential client doesn’t understand your value, do not diminish what you offer. Putting this into practice takes a mind and attitude shift, and must be implemented with confidence.
The value we offer cannabis businesses is often 10-20 times more than the fee that we are paid for our services, and we also consistently yield a positive ROI for our clients, but this may be hard to impress upon a CEO. For example, consider the amount of money that you are saving your clients in tax liabilities, how much theft can be reduced by cash controls, and how much time and energy will be saved alone if/when it comes time for an audit. The information will be readily available and reduce stress and overall costs when your systems are dialed in to these very specific needs for cannabis companies.
Cannabis accounting is an exciting industry, and now is the time to get in and work with these progressive, innovative businesses. The good news is that, as experts, we can offer a TON of value to our clients. Once we understand where we are making the most impact on their businesses, we can create great long-lasting relationships with our clients and be a part of their growth.
If you are an accounting professional and would like more information on how to increase your value for your clients, check out our upcoming webinar on Thursday, May 16th at 5pm.