Taking Stock of What Cannabis Business Investors Want

What are cannabis business investors looking for? Do you have what it takes to attract their attention — and their money?

Table of Content

    A Case for ERP in the Merger and Acquisition World of Cannabis

    The cannabis market is on fire, which spurs increasing interest from cannabis business investors. It’s been the fastest growing industry for years, and shows no signs of slowing. If you are already a successful cannabis business owner, you’ve built your cannabis venture into a well-branded organization. You’ve worked hard to grow profits along with a great company culture. Sales are climbing, and the future looks bright. You are no longer a small startup, but a company other companies may want to fund, merge with, or even buy. The question now is what are cannabis business investors looking for? Do you have what it takes to attract their attention — and their money?

    Having the right ERP system in place to manage your entire company makes your business not only more attractive to investors, but more valuable too. Cannabis ERP systems provide companies with the power to grow efficiently and demonstrate upside opportunity to investors or other companies looking to acquire or merge. Let’s look at a few ways a Cannabis ERP helps make your businesses attractive to investors.

    Demonstrate you’re on firm financial footing

    QuickBooks is often the “go-to” for start-ups. It’s easy to implement, and it can connect with whatever seed-to-sale system you’ve been using. However, as you grow, and your business requirements get more sophisticated, you’ll notice something: QuickBooks is a one-way street. Your seed-to-sale system ‘dumps’ the data in and you have to hope it’s correct. QuickBooks doesn’t promote or enforce business process controls throughout your operation, including ensuring compliant separation of duties. Worse yet, it’s not meant for multi-entity organizations — which many cannabis businesses are, as they often form separate entities for licensing or regulatory purposes. Cannabis ERP systems have a multidimensional general ledger and functionality capable of handling massive volume, multiple locations, work-in-process (WIP) costing, production management, and inventory planning and control.

    Additionally, because your financial system is integrated with your operations — on a two-way street — you can analyze operational and financial data from a single source and manage key performance indicators (KPIs). What extract provides the best yield and margin per gram of THC? Who are your top 10 clients by revenue category? Do existing client buying patterns drive your purchasing and production? With a system managing your entire enterprise, you’re able to answer strategic questions and make smarter, faster decisions better — and speak to potential external stakeholders with confidence.

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    Prove you’re capable of scaling operations

    Taking on investment capital or engaging in potential merger/acquisition deals comes with the desire to achieve rapid growth; small systems only last so long. Cannabis ERP provides essential manufacturing functionality, including perpetual inventory management, materials requirement planning (MRP), and product costing. No more managing through spreadsheets and on whiteboards. Cannabis ERP allows you to scale your processes and business model as you grow. ERP provides deep business insight. It allows you to measure the effectiveness of your business processes so they can be continuously improved to maximize performance. Large investment firms and companies looking to merge want to know your company can grow — and Cannabis ERP supports and promotes that growth.

    Mitigate internal and external risks

    Having a Cannabis ERP system in place at your company can incentivize cannabis business investors, and those looking to acquire, because of the software’s ability to coordinate internal operations with your customers and suppliers. It assures investors that the functional areas of your company are coordinated so the risks of disorganized growth (when roles are duplicated) and potential for destabilizing change management (when key leaders/vendors transition) are mitigated. Investors and those merging not only review the financial strength of a company when making a deal, but also risks associated with guiding the company into the next growth phase. They look for companies that can manage the change and minimize risk with all stakeholders —internal and external.

    A company with disorganized information means a massive investment in time. But a company with an organized ERP infrastructure means new leadership has all the information they need to adjust to changing reporting styles, capital sources, and vendor relationships. An organized company that can manage the change and minimize risk with internal and external stakeholders makes it easy for investors to say yes.

    Show potential cannabis business investors you’re the complete package

    Investors, buyers, private equity firms, and larger cannabis enterprises want to know their investment targets have the infrastructure to grow and generate a return on investment. You’ll need to prove you have the capability to scale end-to-end business processes and garner real-time information about the profitability of your organization. Cannabis ERP solutions demonstrates your commitment to best business practices, meeting compliance mandates, and scaling the company wisely.