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  • Writer's pictureJessica Garrant

The Golden Ticket to Maximizing your Company’s Value

All startups strive to find their niche and differentiator from their competition. This task is even more critical for those startups within the cannabis space, where creativity and uniqueness set one apart from the next. A part of this consideration is thinking of different approaches to boost valuation. Each function plays a role in this – yes, even Human Resources. But, the major reasons HR is one of the top catalysts for enhancing a company's value may surprise you.

To start, let's discuss brand equity since it can be the most valuable asset in your company's arsenal. What exactly makes a brand solid, and how is Human Resources involved in this at all? Sure, your brand encompasses your logo, colors, and tagline, but it also relies heavily upon the values, culture, and reputation your company embodies. A solid brand identity is built on authenticity, consistency, and alignment with your organization's core values. This is where Human Resources comes into play.

For instance, if your brand promises exceptional customer service and innovation, your HR team should be focused on recruiting, training, and retaining employees who embody these qualities. They ensure that your workforce understands, lives, and breathes the brand's ethos. HR can also facilitate internal communication and engagement initiatives that reinforce the brand message among employees, making them brand advocates inside and outside the workplace.

When discussing your organization's multiplier, remember that it is not just a review of how profitable your company is. Of course, this plays a significant role, but a multiplier is a vital indicator of a company's value, plain and simple. It is more fun to elaborate with an example of what this means, so here we go. Imagine you're Willy Wonka, and you created the Everlasting Gobstopper, a candy that never loses its flavor. The value of your Gobstopper isn't just about the candy itself; it's also about the ingredients, a unique formula that makes it last forever – these ingredients are, you guessed it, the "multiplier."

Now, think of selling your Everlasting Gobstopper recipe to another candy maker (not Slugworth, though). They're not just buying the regular candy ingredients; they're paying extra because they know your specific ingredients and process make the Gobstopper extraordinary and incredibly sought after. In business, this recipe, also known as your multiplier, is the additional value your company possesses due to its exceptional and successful formula. What components make up your multiplier will vary from organization to organization, especially in the rapidly evolving world of cannabis. One thing that remains the same throughout is that the higher the multiplier, the more valuable your company becomes to potential buyers or investors who want to utilize the power of its successful recipe for their own success.

So, how can HR help you improve your company's multiplier recipe? Well, just like Willy Wonka's specific ingredients contributed in different ways to the enduring appeal of his infamous candy, HR's impact on your organization comes in various forms, each contributing to enhancing valuation in the competitive cannabis market. A high HR-driven multiplier shows that a company can maintain a happy and motivated team, making it attractive to investors or buyers.

When considering employee satisfaction and keeping with the same Willy Wonka example, HR can improve your recipe by understanding your employees' collective needs and making adjustments to enhance the ingredients. Effective HR helps to create an environment where employees feel valued and engaged. With the support of senior leadership, HR can develop and implement strategies that prioritize employee well-being. This includes initiatives like wellness programs to promote physical and mental health, recognition and rewards systems that acknowledge and celebrate employees' contributions, and training opportunities to learn new skills. HR will also act as a mediator in resolving workplace conflicts promptly and delicately, creating a more harmonious atmosphere that promotes employee happiness.

In case you are asking yourself, 'Why is the happiness of my team important?' -- I'll answer that for you. Happy employees are more likely to go that extra mile, exhibit increased creativity, and collaborate effectively, directly impacting the quality of your products or services. Studies like this one from Oxford University's Saiid Business School show that happy employees are 12% more motivated and engaged than their unhappy coworkers. Unsurprisingly, when your workforce operates at peak performance, tasks are completed more efficiently, reducing operational costs and increasing output. But what about your customer base in this happy employee equation? Happy employees provide better customer service, and satisfied customers are more likely to return and recommend your products to others.

Furthermore, consider the sales within your storefronts. Your budtenders are the forward-facing powerhouses of knowledge to promote and sell your product to your customer base. Those who feel valued and heard will likely outsell those who are disengaged. The combination is powerful and trickles into that something special that will add to your multiplier.

In a previous blog, we discussed a few ways HR adds value to an organization's bottom line, but what about a forward-thinking plan relating to an exit strategy? While an early-stage organization may scoff at planning that far ahead, it is a crucial factor to consider early on. Think about it. If your goal is to exit eventually, why would you only focus on short-term yields rather than long-stage valuation that stands the test of time? Setting the stage for developing a succession plan will reduce uncertainty and enhance valuation. HR excels at identifying and developing potential successors for key roles within the organization, portraying stability and readiness when the time comes for leadership transitions. This preparation soothes the nerves of investors or buyers and positions the company for a more favorable valuation by showing a stable company that has thought about transition plans from multiple angles.

As a bonus, HR can undertake diligent scrutiny of the human capital aspect during the exit process. Ensuring all HR-related aspects, from contracts and benefits to compliance with cannabis regulations, are in impeccable order can expedite the exit.

Just as Willy Wonka's specific recipe ensured the Gobstopper's undying appeal, HR's impact goes beyond managing people. It is instrumental in crafting a workplace recipe that not only creates a team as irresistible as a magical candy but also leads to higher sales and increases your company's multiplier. A motivated and engaged workforce, fostered by HR's strategies, translates into enhanced customer service, innovation, and, ultimately, higher sales. And don't forget, when a company seeks to acquire another business, the brand identity is one of the top considerations when assessing the value of the investment.

Reach out to Happy Gnome HR today. Let us help you create your own HR-driven multiplier, making your cannabis startup a coveted and everlasting prospect in this ever-evolving industry.


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