Six warning signs of bad consulting firms
Are they looking out for your business or their own?
By Katie Podein
In order to help cannabis businesses navigate the potentially destructive minefield of bad consulting firms, here are six warning signs to look for:
– Opportunities that sound too good to be true: If it sounds too good to be true, it usually is. The most common and injurious claim I’ve found is the promise of a local or state license to operate your business. No company can guarantee you will receive a license. Because of the specific nature of the approval process, any company that makes this unqualified statement is — to put it bluntly — either stupid or lying. Proceed with caution if any consulting firm attempts to get your business by making fantastic and unfounded claims.
– Undisclosed conflicts of interest: In regards to licensing, many local authorities will only issue a limited number. One question a business owner should ask is whether the consultant has any other clients who are seeking licenses in your city or county. If so, you and the other client may be fighting for the same license. Ask whether the consultant has a resolution for this potential conflict. It’s a glaring warning sign if the consultant is not prepared to answer these questions.
– A big price tag for an unknown outcome: You should demand to know the exact details of what consulting and advisory services the firm will provide. The consultant should draft a proposal that includes a price quote, the strategy, steps for implementation and a list of services that will be provided at an additional cost.
Make it clear that you must give written consent before the consultant performs additional services or spends money on your behalf. Also, outline deliverables with due dates and reports if applicable to your business. This doesn’t need to be included in the contract; an email exchange should suffice.
– Turn-key solutions for your business: The political atmosphere, physical location of your business, competition and phase of the business cycle should all be taken into consideration. Consultants who claim to have a turn-key solution for your business are mistaken. Good consultants know that what worked for one client may not work for every client. If the consultant is not willing to go the extra mile to provide tailored solutions for your business, then you should find one who will.
– You never hear the bad news: No one wants to hear bad news, and being the one to divulge it can be even worse. However, a consultant’s advice must be based on reality, which includes addressing all the pitfalls of operating in the cannabis industry. If you’re only hearing positive news, then it’s time to find a consultant who will tell you the whole truth — both good and bad.
– Poor communication skills: The client-consultant relationship can have a direct impact on the success of your business. A smart consultant understands this and knows how to foster this relationship. In the initial meeting, consultants should freely share their background, qualifications and skills, as well as those details about their staff members. Additionally, there should be an open line of communication to ensure your concerns are addressed and goals are met.
Katie Podein is an attorney with California Cannabis Law Group (www.califcannlaw.com). She assists clients in navigating California’s rapidly evolving cannabis market. She can be reached by email at info@califcannlaw.com.