mjba seattle meetup 1/20/2015 - what every marijuana retailer should know about building a...

What Every Marijuana Retailer Should Know About Building A

Successful BusinessMatt Beckley and Ben Curren

Who is Ben Curren?

A Family Man

A Nerd

A Software Engineer

An Entrepreneur

Founder of Esomnie, Bootstrap

CTO and Founder of Outright

Still serving over 800,000 small businesses

Processed over 6 billion financial transactions

Grew to 60 employees

Raised 11M in capital from top tier investors

Acquired by GoDaddy July 2012

CEO and Founder of GreenBits

Founded May 18th, 2014

Launched with 3 Washington stores in July 2014

5 person team

30+ retail stores in Washington

I worked with the best mentors

Marc Andreessen – CoFounder of Netscape

Bryan Schreier- Partner @ Sequoia; Dropbox board of directors; Google

Rob Hayes – Partner @ First Round Capital; Mint.com investor

Mark Goines – Angel Investor; Everything small business

Ravi Mohan – Partner / Founder Shasta Ventures; Nest Investor

This is what I learned

A successful business is a money printing machine

How big can your business grow?

How fast can you feed your business cash?

How much time before money comes out?

What is the ratio of cash in and cash out?

Cash In Cash Out

Time

Your job as an entrepreneur is to build a “machine” that fits your goals. Lifestyle business.

Boutique business.

Large enterprise.

Create a lifestyle business model based on your goals.

Goal: Replace my income of $60,000 / year. Meet new people. Control my destiny and don’t work for “the man”.

Model: Hire 3 people. Sell $66,000 of product. Margin of 30%.

Create a enterprise business model based on your goals.

Goal: Generate 120M run rate in 5 years. Profit margin of 40%.

Model: Open 30 stores between Washington and Colorado with average monthly revenue of $333,000.

Create KPI’s that verify your business model.

Choose 5 – 6 KPIs, key performance indicators, to work on at a time.

Revenue KPI examples

Average revenue per sale

Average units per sale

Average profit per sale

Sales per square foot

Customer satisfaction KPI examples

Average rating of 4/5 for 90% of all surveys

Everything program or process in your business should tie to a KPI

KPIs

Programs and

Processes

Business Model

Note: Your goals should not change often.

Interesting programs we’ve seen.

Barcode all products when placed into inventory

Outcome Budtenders scan item when ringing up a sale. No manual mistakes.

Budtenders don’t need to understand the details of traceability.

Hire budtenders who know the product well.

KPI 0 LCB compliance citations

Ringing up sales should take less than 60 seconds on average.

Stock an ATM with cash from your vault

KPI Reduce fees for cash payments to 1% of all deposits.

How1. Create a company for your marijuana retail store.

2. Create a company without a cannabis sounding name.

3. Get an ATM machine under your non-cannabis company and tell them you fill it with cash yourself.

4. Daily fill the machine with cash from your cannabis company transactions.

5. The money withdrawn will be deposited to your non-cannabis company account.

6. Bonus: You can also sell T-Shirts and other items through your non-cannabis company.

Minimize your cannabis tax obligation IMPORTANT NOTE: Starting February 11th, 2015 this activity is not allowed. The LCB posted emergency rulings that stopped this controversial practice.

How (please check with your tax accountant)1. With customer consent, sell a paraphernalia item with every marijuana sale.

2. When ringing up the sale, discount the marijuana item to cost and add the increase the cost of paraphernalia a similar amount.

Outcome Decrease your excise tax obligation.

Decrease your federal tax obligation.

Shift more profits to paraphernalia for more write offs.

280e – write off expenses by % of revenue for non-cannabis items

KPI Reduce tax obligations to 40% of profit.

Partner with the best. Verify they are the best

How Choose your producers and processors wisely and become partners

with them.

Dedicate 10% - 20% of your COGS to new experimental partners and products.

Grade each vendor by KPIs such as margin, customer satisfaction, % of sales.

Champion vs. Challenger mentality.

Be transparent and explain to partners they have to perform.

KPI Average profit per shelf space square footage should be > $30.

Questions or comments?Green Bits Point of Sale and Inventory Management Solution Easy to use.

Automatically reports to the WSLCB. No work on your part required.

Manage your cash and you products.

Run the reports you need to make the best decisions for you business.

Try it Yourself at our booth at THIS MEETUP

Contact Us Ben Curren – ben@greenbits.com Matt Beckley – matt@greenbits.com Visit our website: http://greenbits.com Call us: 877.420.7628