When I first moved out of my parent’s house, my spending was out of control. I bought take-out regularly, new clothes often, and fun products frequently.

However, I quickly realized that I was spending too much money on unnecessary things.

After racking up some credit card debt, I realized that I needed to cut costs somewhere.

As a business owner, it can be just as easy to overspend as it was for me.

When that happens, it’s time to review your bottom line and see how you can reduce your spending.

In this post, let’s go over some of the top ways you can cut costs in your business.

1. Analyze and track the efficiency of your business.

Before you can reduce costs in your business, you need to take a step back and analyze what you’re currently spending money on.

Take a look at your balance sheet and your budget. Look at your production costs, and do an in-depth analysis of your current processes.

Asking yourself questions like, “Is what I’m doing efficient?” and “Am I spending needless money somewhere?”

Once you have a full picture of what your spending looks like, you’ll have a better idea of where you can cut costs.

2. Negotiate with your vendors.

A great way to cut costs in business is to negotiate with your vendors. You should price shop and compare vendors in almost every area of your business.

For example, if you’re deciding on insurance providers or looking at supply costs, you should communicate with the sales reps that you’re looking at other companies as well.

This will let them know that you aren’t afraid to walk away and are ready to negotiate costs based on your research.

3. Bring efforts in-house.

Outsourcing can make sense if you don’t require a full-time employee to do a task. However, bringing your efforts in-house might save you money if you’re outsourcing several projects that could be assigned to one person in-house.

To decide if you need to bring efforts in-house, take a look at your current outsourcing budget, and compare it to the cost of one part-time or full-time employee.

4. Eliminate products that don’t sell well.

Developing products requires time and money. Instead of selling a bunch of products that don’t sell well, focus on the products and services that make the most money.

By concentrating on the products that sell, you can deliver higher quality products. Plus, you won’t waste money on the services that aren’t selling.

5. Hire the right people.

Hiring the right people is important for several reasons. If you choose employees that have specialized skills and are experts in their field, you’ll have an efficient staff.

When your employees aren’t sure how to complete a task, they’ll spend time researching and learning about it on your dime. That can possibly waste both time and money.

If you focus on hiring the right people, you won’t have to worry about whether your staff knows what they’re doing.

Additionally, you should also hire for culture fit as well. You don’t want to have too much turn over, because that can also waste money.

6. Crowdsource when necessary.

While you should bring efforts in-house if you’re spending too much money on outsourcing, if certain tasks don’t require a full-time employee, you can work with freelancers.

Freelancers are generally less expensive because you only have to pay for labor on a certain task. You won’t need to pay for benefits or training.

If you don’t need to have a full-time staffer on board to complete an assignment, consider using freelancers.

7. Evaluate your technology.

One of the top ways that businesses waste money is by subscribing to software you don’t need or stopped using.

It’s important to evaluate your technology needs on a regular basis and ensure your software is up to date.

You can hire an IT person to be in charge of consolidating your software needs and make sure you don’t overspend on technology.

8. Consider a remote set-up.

When I was in college, I worked on a fully remote team of 10 people. If you’re running a small business that doesn’t necessarily require a physical office space, you should consider going remote.

Office space is one of the most costly expenses that companies spend money on, and you might not need to.

In fact, not all companies require physical space. Some positions are suited perfectly fine to a remote set up. This could end up saving you thousands of dollars a month.

9. Buy in bulk.

Of course, a great way to save money is to make purchases in bulk. However, when you do this, make sure that you’re saving money.

Not all items need to be bought in bulk. For example, if your team doesn’t drink a lot of coffee, you don’t need to make that purchase in bulk. However, if your team can drink through bulk coffee quickly, then buying it in bulk will save you money. It just depends on your needs.

To save money, evaluate which items should be bought in bulk and which items can be bought on a smaller scale.

10. Participate in loyalty programs.

Let’s say your company spends money on paper every month. This is probably a repeat purchase that you’ll likely continue making for the duration of your business.

With these types of purchases, you should do some research and see if your suppliers offer loyalty programs.

You might be able to save money from the stores that you make purchases from all the time.

Additionally, you could also work out a trading system with other companies. Don’t be afraid to talk to other business owners and see if you can work out a system with them.

11. Become eco-friendly.

Environmentally friendly appliances are great for the environment, as well as your budget. That’s why you should consider becoming eco-friendly with your purchases.

For example, you could consider going solar, buying an eco-friendly fridge for your kitchen, etc. A lot of appliances can be made eco-friendly and save you money.

12. Treat employees well.

When employees are happy, they become advocates for your company and will want to stick around. This means you’ll spend less money on training and onboarding.

When companies are more focused on the bottom line than their employees, they’ll likely experience a lot of turnover.

I’ve seen this first hand and having a rotating door of employees will end up costing you more money than just treating your employees well from the start.

13. Consider bundling your services.

This might seem like a simple suggestion, but a lot of purchases can be bundled together. If that’s an option, you should consider it.

For example, services such as phone and internet are usually bundled together. Bundling services will typically save you money.

14. Automate processes.

When your processes can be automated, you should do it. This means you’ll spend less money on labor and you’ll have a more streamlined process in place.

For example, if you use marketing automation software, your marketing team won’t have to manually post on social media or send emails every morning. Instead, they can automate that process and it’ll save them time and save you money.

15. Use reward credit cards.

As a business owner, you’re going to spend a lot of money. That’s why you should spend money wisely.

For example, you can get a business credit card to charge things to so you can make use of rewards or cash-back programs. This way your purchases will add up to rewards and bring you money back.

When it comes to reducing costs in business, it’s not about looking for ways to cut corners or take advantage of your employees. It’s about streamlining your processes so they’re working for you.

Original Source: blog.hubspot.com

Insurance is a key part of any business, including cannabis businesses. As Jonathan Bench has explained:

Insurance in the cannabis industry is big business, and business owners need to know what policies are available and what those policies cover. Why? Because in insurance policies, like all other business contracts (e.g. leases), the risk of a business venture is divided between the contracting parties. Your insurance policies are contracts where you pay your insurer to take some of the risk of your business venture away from you – for a fee, of course.

Among the most important aspects of an insurance policy are the circumstances in which it requires an insurer to defend and indemnify the policyholder from a lawsuit by a third party. Disagreements between the insured and insurer may result in lawsuits between the insured and insurer, often over enormous sums of money.  The lawsuits typically arise from a simple set of facts: (1) the insured is sued or threatened with a lawsuit, (2) the insured notifies its insurer (“tenders the claim”) and asks for defense and indemnity, (3) the insurer informs the insurer of its coverage position, i.e. that it will not defend or indemnify, or that it will defend but with a reservation of rights, (4) the insured disputes the coverage position and cannot reach a resolution with its insurer, and (5) the insurer or insured files an action for declaratory judgment asking a court to rule whether the insurer has a duty to defend and indemnify.

These kinds of lawsuits—typically referred to as “coverage actions,” require a close reading of the insurance policy and relevant case law alongside the complaint filed against the insured. The resolution of a coverage dispute may drastically effect settlement and may result in financial ruin for an insured whose claim is deemed outside the insurer’s duty to defend and indemnify.

Last summer I wrote about a multi-million lawsuit filed by Big Bush Farms against Boones Ferry Berry Farms arising out of a hemp production contract. Briefly, Boones agreed to plant, grow, dry, and harvest 27,000 plants for Big Bush. Boones agreed to pay all costs relating to the grow and Big Bush agreed to pay $25/lb for all the hemp harvested from the 27,000 plants, plus a bonus of $1/lb for every 2% CBD oil content over 10%. Payment for the crop was due at several intervals on or after the delivery of the crop. Big Bush alleges that Boones harvested 108,000 lbs of dried biomass which tested at 14.5% cannabidiol (“CBD”) oil content. Boones apparently delivered only around 4,200 lbs of the crop even though Big Bush had prepaid $150,000. Big Bush claims that Boones failed to deliver the remaining 103,747 lbs of hemp and failed to deliver other hemp grown pursuant to an oral agreement.

Last fall, I noted that American Family Insurance had filed a lawsuit in the federal district court of Oregon seeking a declaration from the court that it has no duty to extend to a defense to Boones Berry Ferry Farms, LLC and others (together “Boones”). The gist of the federal lawsuit is that American Family contends the claims against the insureds in the underlying state-court lawsuit do not give rise to a duty to defend or indemnify. Although the state-court lawsuit continues, the federal district court recently ruled in favor of American Family on the coverage question when it affirmed the report and recommendation of a federal magistrate.

Let’s take a look at this coverage dispute. Whether an insurance provider has a duty to defend is a question of law, typically determined by analyzing the insurance contract and the complaint. In most states, where a complaint is unclear but may be reasonably interpreted to include an incident within coverage, then the insurer has a duty to defend. Here, the Policy provided that American Family would provide a defense and pay damages because of “property damage” caused by a covered “occurrence.” The Policy defines “property damage” as “physical injury to tangible property. This includes loss of use.” The Policy further provided that property damage does not mean physical injury to “marijuana or cannabis plants, or any equipment or material used to grow, harvest, or cultivate marijuana or cannabis plants, even if legal in your state.”

American Family argued, among other things, that the complaint against Boones failed to allege “property damage” as defined by the complaint. American Family reasoned that the only property described in the complaint was “industrial hemp,” which is a product of “cannabis plants” and excluded from the definition of “property damage.” Thus, said American Family, there was no duty to defend because there was no property damage under the Policy.

Boones countered that the complaint did not allege physical damage to cannabis plants but rather harm from the “loss of use of tangible property” in the way of deprivation of the possession of industrial hemp. Boones contended that because the first part of the Policy defines property damage as including “loss of use,” American Family had a duty to defend.

The magistrate was not persuaded by Boones:

The Court reviews the Policy “presuming that words have their plain, ordinary meanings.” The Policy states that: “‘Property damage’ means ‘physical injury’ to tangible property. This includes loss of use.”. Under the plain language, “property damage” is “physical injury.” Given that the two are synonymous under the Policy, “[t]his” refers to both “property damage” and “physical injury” and both include “loss of use.” The Policy further provides: “Property Damage does not mean physical injury to . . . cannabis plants[.]

Because the Policy expressly excludes physical injury to cannabis plants, the Policy excludes “loss of use” of cannabis plants.

Consequently, the magistrate ruled that American Family had no duty to provide Boones a defense in the state-court lawsuit. Boones sought review of the ruling by the district court.

The district court agreed with the magistrate. Boones argued that the policy was ambiguous and must be interpreted in their favor. (This is an argument made by nearly every insured). The court disagreed. Although Oregon interprets insurance contracts against the insurer, said the court, Boones was not entitled to the benefit of that rule unless an ambiguity remained at the end of a three-step analysis. Under Oregon law, a court must:

(1) examine the text of the policy to determine whether it is ambiguous, that is, whether it is susceptible to more than one plausible interpretation (2) examine the disputed terms in the broader context of the policy as a whole; and (3) only if ambiguity remains, construe the policy against the drafter.

Boones, ruled the court, did not clear the first step of the analysis because the Policy plainly excluded coverage for loss of use of cannabis plants. So Boones has to carry on in the state-court lawsuit without any expectation that its insurer will pay for its defense or indemnify it from a damages award. And the plaintiffs in the state court cannot count on reaching into the pockets of the insurance company.

We expect coverage lawsuits involving hemp to become more commonplace, just as they are in other industries. My advice to hemp business owners is threefold:

Make sure you have insurance and that you understand what loss(es) the insurance is intended to cover.
Notify of your insurer (and your coverage lawyer) of any potential claim as the failure to do so can often result in a denial of cover.
Retain an experienced coverage lawyer to review the policy and the insurance company’s coverage position and don’t wait long to do it. Your lawyer may convince the insurance company to change its position and save you thousands in defense costs and damages. In the best case scenario, you may not need a coverage action at all.

For more on cannabis insurance, check out the following:

Anatomy of a Cannabis Insurance Policy, Part 1: The Basics
Anatomy of a Cannabis Insurance Policy: Exclusions
Cannabis Business Basics: Liability Insurance is a Non-Negotiable Priority
Cannabis and Insurance Litigation
Yes, Washington, You Really Need Cannabis Business Insurance

The post Hemp Insurance Litigation: Oregon Federal Court Rules Insurer Has No Duty to Defend or Indemnify Hemp Farmer for Plant Loss appeared first on Harris Bricken.

Original Source: harrisbricken.com