How to Get Cannabis Accounting Clients to Notice You (and Pay You More)
Starting out as a cannabis professional can seem overwhelming, especially if you haven’t landed a client yet. You may not know which services to prioritize or how to get a prospect to see your value.
You know your worth, and your professional skills are essential. The trick is to show your prospect your value without making them feel like they’re taking a financial risk.
We’re not talking about free work. We’re talking about a “low-bono service” or, as it’s called in marketing, a low-cost offer.
Low-cost offers are value-in-advance services that are low risk to the prospect. You get compensated for your time, while making it easy for the client to say yes to more services.
In accounting, this foot-in-the-door project is called the accounting service audit. Much more simple than a full-on financial statement audit, this quick service takes only two or three hours to complete and can triple or quadruple your revenue.
When you know how to perform one confidently, you’ll build credibility and trust in the eyes of your prospects.
The Untapped Power of Providing a Low-Cost Service
Here’s a little-known secret from the most successful business owners. The people raking in six, seven, or eight figures started building revenue by first giving away their expertise.
Most of these successful leaders didn’t literally give services away for free (we’d never recommend that). But there is something to be said for providing low-cost services when you’re just starting. It’s called the law of reciprocity.
The law of reciprocity demonstrates that when people receive something of value from another person, they feel compelled to return the favor.
Because prospects will see your accounting service audit as high-value and low-risk, they will quickly view you as a potentially invaluable resource to their business. And when it comes time to hire someone to perform the services you recommended, they will likely reach out to you.
Think about this “law” in your own life. How often have you received a download or attended a free webinar from someone you respect? Once you consumed the free, value-packed information, you wanted to know what else that person could offer you or teach you (if the marketing was effective).
The same rule applies to your client outreach and acquisition.
A brief tour of an accounting services audit
An accounting services audit isn’t the same as an extensive financial statement audit. Instead, you’ll spend a couple of hours max reviewing the company’s books and records. You then identify holes and missed opportunities.
To charge for an audit, we recommend considering your hourly rate and the number of hours you would dedicate to the service. For example, if your hourly rate is $250, you could charge anywhere from $500 to $750 for one audit.
By identifying these missed opportunities, you automatically create a list of possible services you could deliver.
An accounting services audit includes these basic steps and components:
Request the company’s most recent financial statements – Gain access to the company’s most recent balance sheet, income statement, charts of accounts, payroll statements, marketing spend, and more.
You may find these documents are not available, months behind, or incomplete. Whichever state you find them in, you’ll be able to identify gaps such as missing expenses, unrecorded debt, or overspending on payroll. You will be able to tell by their chart of accounts if they are appropriately accounting for Cost of Goods Sold (COGS). Or you may review opportunities to save on interest expenses and banking charges. By looking at their costs on a foundational level, you can immediately identify where you could fill in and help them.
Review financial forecast and projections – If a company doesn’t have these reports, this is your opportunity to help them understand why. Emphasize the role these reports and projections serve in the growth of operations. And this would be the perfect tie-in to offering your CFO-level services in this area.
If forecasts and projections are available but incomplete, double-check if they’ve budgeted for license renewal, payroll increases, tax expenses, and more.
Comparing budget to actual – Like the other documents listed, these reports may not be available. If they’re not, you have an excellent opportunity to offer your services upon the conclusion of the audit. Help them see how they are performing against their budget and where they may be falling short.
If they are accessible for analysis, they may be completely off target. The business owner may be scratching his head over why they keep the missing budget. So, you guessed it: there is your chance to show them how to analyze and refine their budget to increase the next quarter’s profit margin.
Tax filings and returns – Here’s an area where most clients will be in the dark. New cannabis business owners may not even know which taxes they need to pay and the rules and regulations of federal and state tax.
Make sure you can access marijuana, payroll, and federal taxes to perform your audit. With each type of tax, you’ll want to review if they’re up-to-date and have been filed and paid on time.
More specifically, you’ll want to ensure that marijuana tax matches POS system reports for dispensaries and retail stores. For payroll tax, see that all state-required filings and payments are completed. This includes registering any unemployment or FMLA tax. Finally, go over the federal tax records with a fine-tooth comb. Verify that they’ve been complying with 280E. Conclude that all taxes agree with the calculations on the financial statements.
Identifying and recommending KPIs – KPIs or key performance indicators are necessary for companies to set achievable, measurable goals and track their progress each quarter.
When you first sit down for an audit, ask if the accounting department provides KPIs. You’ll want benchmark numbers for inventory aging, inventory turns, best-selling products, average transaction value, and budtender performance.
Depending on the results, here’s another opportunity for you to state why KPIs are essential and which ones are important. Furthermore, you can present a solution for implementing a reporting system or process. This SOP will help the business owner review and manage their business based on these well-organized and tracked KPIs.
Moving on from the audit to the engagement letter
You’re probably noticing a pattern in the components of this audit. With every set of documents you review, flag, or report on, you open yourself up to multiple opportunities. Recommend holes — and upsell your services.
The more you show a client that you are a trusted advisor, the more services you can add to your engagement.
You will be the solution to the holes you identified in their accounting. Because of the audit, you will have a list of services you can include in the formal engagement letter. By taking advantage of the low-hanging fruit via this audit, you’ll stand out as an invaluable professional. Clients will look to you to put together the pieces of their business puzzle and help them achieve the next level in compliance and profitability. And they’ll pay you accordingly.
Get started with the accounting services audit to stand apart and become the accounting professional cannabis businesses are desperate to hire. Then you can focus on achieving six or seven figures with your practice.
For more insight and steps you can take now to land cannabis accounting clients, try out a 30-day membership trial today at the National Association of Cannabis Accounting and Tax Professionals (NACAT Pros).