Our industry is at an inflection point, which means your company probably should be too. Investors who have waited on the sidelines can no longer ignore the progress made and the opportunities now in front of them. Over a third of U.S. states have legalized recreational marijuana while 37 states consider it legal for medical purposes, and movement toward federal legalization looks promising (albeit slow moving). The North America legal cannabis market, valued at $12.4 billion in 2021, is expected to grow at a 16.6% compound annual growth rate from now to 2028, according to Grand View Research.

Where do you see your company in this growth trajectory? If you anticipate the need to pursue funding to keep up and meet your future goals, now is the time to prepare. Your ability to advance could depend on whether investors think your company is worthy.

The fact is, despite investor interest heating up (consider the $100 million raised by cannabis e-commerce startup Jane Technologies in Series C funding last year), securing funding is always a challenge—in any industry: Now, as investors become more discerning as this industry matures, you are no longer unique by being a “cannabis company.” Investors are on the lookout for viable, promising companies that have substance, with leaders who have the ability to operate and grow a company and who they can trust.

Achieving this level of “investor readiness” often requires some significant introspection and streamlining your operations, including the finance and accounting function so that you have a clear, compelling, consistent, and truthful story about your business. Consider these steps as you work toward being ready to both attract and win over investors.

Clean up your operations 

Your dispensaries may look sleek and beautiful to customers, but what’s happening behind the counter? Can finance and accounting confidently say how much cash you have? Are bills getting paid on time? Do you have a monthly close process? Behind-the-scenes inefficiencies can lead to delayed and/or inaccurate financial information—and investors will pass you up with even a hint that your company has this problem.

Finance is the language of business and your financial statements are the start of your story you’ll be telling investors, to help them understand your company’s history, its current iteration, and how far you can take it. Numbers don’t tell investors much by themselves and yet the first step is to have one version of the truth that represents the state of the business. Once you have one version of truth, you need to put it in context and compare how you stack up with others and how far you have come along.

Prioritize the problem areas

Now that you have one version of truth on the state of your business and a view on how you stack up in the industry, you will need to prioritize which of the areas in your business experiencing issues needs addressing first. Typically, no one can tackle it all and yet understanding what investors expect to see will help direct you. What will matter is having access to finance and accounting resources and expertise (in-house or outsourced) so that investors see you have current, accurate, and timely financial information guiding your decision-making and planning process. 

Sometimes you have to step back to notice any problems that could be holding your company back. An independent assessment of your operations and business/finance management helps to get all parties involved on the same page, can reveal strengths and weaknesses, and help you prioritize changes that will lead to a better, stronger understanding of the business. You may be surprised by the true cost that goes into each product you sell. Your cash burn rate may be higher than you thought. Such information could make or break a business in the early stages. 

Create a business plan that speaks to everyone

Investors are not just investing in your business concept—but your knowledge as well. In order to feel confident, they need to understand where you are coming from, including what you’re seeing in the market and your company’s place in it. Your business plan gives you an opportunity to do this, but it must be clear to a range of constituents. Any interested parties in your business—not just investors, but employees, customers, suppliers, etc.—are all speaking a different language, whether they are deeply involved in the industry or looking to get more involved—so you want to present a clear, integrated view knowing what’s important for each stakeholder.

Why are you seeking funding? What’s your vision and plan to get there? What are your financial goals over the next three to five years? What’s your distinction in the marketplace? Your business plan is where you can show that you know your customers, your product, the skills and resources required for the business in order to meet your vision. A vision without a plan is merely a pipe dream.

Start Asking the Tough Questions

Is it time to ramp up hiring? How can you scale the business to meet future demands? If you’re dreaming of expanding into another part of the country or even outside of it, how many dollars will it take—and what will you lose out on if you don’t make such a strategic move? Many tough questions need to be asked, and you need to know how to find the answers. Going through the steps in this article—and addressing any knowledge gaps that are preventing you from getting the insights you need—will get you closer to becoming “investor ready.”