The cannabis industry is still in its nascent stage, but the mergers and acquisitions happening here are drawing all eyes towards it. Cannabis businesses, be it cultivation facilities or dispensaries are being acquired in staggering amounts. For instance, an integrated Arizona marijuana operator was acquired for $211 million, another Florida-based multistate marijuana operator acquired Arizona-based Harvest Health & Recreation in a deal initially valued at $2.1 billion.
So, if you are a cannabis business owner and have started yours just to sell it in the future, or you have just decided to sell your business because of the big money involved, there is nothing wrong with that.
What you must understand is that selling a business is no walk in the park – it’s a complex and time-consuming task. While the sale of every business – cultivation facility, dispensary, or recreational store is unique, however, the fundamentals are the same. And there are well-established steps you can take to find the right deal. The better prepared you are, the more likely you are to get maximum profits. It’s ideal to get your business ready the moment you are preparing a business plan. This will allow you to get things in order and command the highest price possible. Selling your business for maximum value will depend on a number of factors, including the IT infrastructure of your business, compliance, the loyal customer base, and the reason you’re selling.
Why IT Is Important?
Here is why IT is important for every business:
- IT is the lifeblood of every business. Integrating your IT infrastructure is no child’s play. You need experts to do it right. A stable IT structure helps a business maintain its competitive edge and drive strategy and growth.
- Setting up your IT system is not a DIY project as it is tough to integrate. A robust IT is also critical for compliance, especially for cannabis businesses
- Another reason for having a stable IT system is that financial and company records need to be stored digitally. You need to have correct financial records for your business and you need to be able to show the possible buyer how much profit the firm is making and how it is making it. Although, all this sounds so elementary, yet most entrepreneurs are not equipped with all the financial information when they wish to sell their firms. If you’re thinking about selling in the future, be sure you’re keeping good records right now.
Never Too Early
There is no reason not to have a well-planned, professionally-managed, well-controlled IT right from the start or years before you’d even consider selling. It is also less expensive to do it right at the first go rather than to wait and overhaul a $100K-$1 million systems. Also, some things are irreversible – if you lose records and backups, you can’t recreate them, lowering your chances of getting acquired by a cannabis industry leader.
Things to Do to Prepare for Acquisition
Pick the Right Software & Hardware
It is important to pick commercial-grade, reliable products, from trusted sellers. You wouldn’t want hardware or software that is outdated. Get the best products for your business making it easier for companies to acquire you.
Develop Standard Operating Processes
Creating an SOP (Standard Operating Process) for your business ensures that consistency is maintained at every level. Develop a standard process to onboard & offboard, training, SLAs, data backups, password changes, setting up new devices, and many more.
Yes, this is important. It is the secret of measuring your business’s success. Documentation will not only help you make processes easier but also help with legal and financial matters.
What you must document:
- Detailed inventory
- Document changes to things like security/firewall settings
- Data backup changes
- Password updates
- Financial updates
- Legal updates and much more.
Another important step is to back up everything. When we everything, we mean every single detail such as financial data, employee and other business records, sales data, surveillance footage, and much more. If you use SaaS products enquire about their backup process and do it yourself. Save the data in separate folders and name them accordingly.
Make Sure You’re Compliant
Compliance in the cannabis industry is of utmost importance. For instance, most states require you to retain surveillance footage for a certain length of time and other records too. Therefore, ensure that you are diligent and compliant, or you could fall into trouble with the regulatory authorities. Choose software that has compliance features built-in.
Take Steps to Protect Your Data
High-level breaches can happen if you do not take adequate measures to protect your system and data. Ensure enough security is installed with real-time monitoring systems are in place.
Employ an effective antivirus, firewall, strong and unique password for every single account, and follow the zero-trust policy to keep your business safe. Ensure that you manage and monitor all users and devices at different levels, also request for a security audit if you’re unsure.
Keep Things as Simple & Controlled as Possible
Don’t complicate processes and make it easy for the acquiring organization to integrate with you. Avoid using niche software, as its market and users are limited, and the scalability of the technology may pose to be a challenge in the future.
To have better control and a secure environment to prevent any loss of data it is recommended to keep your records centralized. Never try to integrate too many applications in your software as they may behave abruptly at times.
How Cure8 Can Help?
Cure8 can help in auditing and remediating your current IT system. We can also help you in getting your strategic IT acquisition in shape and keep it that way until you’re ready to sell. You can request a free assessment now.