Hempco Canada Case Study
Hempco started in 2004, manufacturing hemp food-based products, protein, nut, and oil. Charles Holmes, the CEO imagined a sustainable business, feeding the planet without a footprint. I (Angela Holmes, sister) was handling accounting, sales, and shipping when we moved into our first corporate office. Charles, the CEO, was working with production, contracting farmers, education and did all the travel to spread the word about Hemp onto mainstream markets. It was a very tough go, back in the day, because no one knew what hemp foods were. It was associated with Marijuana and was difficult and time consuming to break the mindset of most of the populace. The largest issue was Health Canada having hemp foods registered as “a controlled substance”. 14 years later it changed with the opening of legal Marijuana in Canada! It was absurd! To cross the border with Hemp foods as we started to grow, we literally had to speak with the DEA (Drug Enforcement Agency) to get our products released from compounds. I had to get a criminal record check by the local police each year to sell food.
We started locally within our BC province to educate and sell in small quantities; 1 litre of hemp oil, 1 bag of 1 lb nut and Hempco’s claim to initial fame – protein powder. Other companies were making Hemp flour, but Hempco was the first to figure out how to get a higher protein content out of each milling.
As the business grew quickly after the first year of operations, I needed help with accounting. I hired a firm to help and that’s where I first met Maryam. This is when the work truly began to organize and systemize Hempco, to eventually end up publicly traded on the TSX, and then later acquired by the big guys over at Aurora Cannabis.
Challenges faced with business/finances/accounting, before hiring AccNet
The issue with accounting was how to calculate waste to see our margins clearly. At the time, we were making varying degrees of protein content, 30, 40 and 50%. Each percentage had a different amount of waste. And the by-product of the waste was oil, and at the initial start of our business, was considered a “lost litre”. By 2017, customers only wanted oil. In Fact, each year only one of our products was in demand based on the market. Each year we had to adjust our calculations, restructure sales strategies. Then there was the waste calculation in making hemp nut. It sounds simple: put in a pound of product into a dehuller, get a 50% return. Oh no, then there is the issue of what time of year you process, is it too hot, is the mill running correctly, each crop was different based on where we grew the hemp with our farmers, cost of the product changed very fast when it became an “IT” item needed for health. It took numerous years, as we grew very fast to determine factors.
Even then, we were as dumbfounded as the year before. I had hired specialists to come in and discuss a reasonable basis to get the cost of goods and a formula for waste. I mean the accountant from one of the largest companies in the world, he was just as much at a loss as I was. It was all due to the indeterminate business we chose, as it literally changed and redeveloped itself every 6 months. In hindsight, I would have not been able to do anything different, but with foresight, I see what the problem was. It was time. Hempco needed enough time to calculate both expectations from the market and to lay out what each month gleaned for sales, waste, production etc.
What did AccNet solve and optimize in your path to business success
The most integral part of finding the right person to oversee your company as an accountant is 3-fold:
- Give your accountant enough time to grow with you, as you chose that person out of respect for their diligence
- Ensure you tell them every aspect of your business, so they understand all the pieces of the puzzle. That means everything
- Work with that person to learn all you can about options/aspects of your company you did not think of. As a COO AND CEO, it is your job.
I continued working with Maryam even as we went on to be a publicly-traded company on the TSX (now fully acquired by Aurora Cannabis). The first and foremost reason; she knew absolutely everything about our company, I had already worked with Maryam for a decade and I could talk with her as an equal about our business because of that. That ensured success based on foundational information needed to move forward and her skill as an accountant, and business owner.
AccNet was literally the only company to help breakdown this very difficult 10-year growth to understand cost and waste. It was not only fruitful, but I was able to be part of the whole process as I was delivering the information and it was astounding how easy it became, once we solidified a format for success and I learned a new way of viewing the accounting process. I was literally trained by Maryam! I believe every “C” suite should know every aspect of the company, it takes a great deal of time, but if you involve yourself in every aspect, you represent your company in every aspect. This is one issue that everyone should have under their belt: accounting. It really is a required investment in your company. If you and your accountant aren’t close, you aren’t maximizing your business, period.
2 or 3 business metrics that AccNet assisted you with
As we grew my role in the company changed to C.O.O. I was running production, shipping department, bulk sales, all parts to a public company as I knew all the processes, I had to deal with course insecurities, all public accounting timelines; it was overwhelming. I asked AccNet to take on more of the work, but we still were precariously balancing practice to manage costs. Even more so than when we went from making $50,000 per month to $ 500,000 per month. Maryam and her team were able to take the time to deal with our new CFO, create better protocols with assessments in a timely manner (which means in a public company, the exact time for reporting) and basically managed the job of managing our CFO who was brand new to the company. She never missed an email, phone call, or text, and was always available no matter the time of day. I can never explain to a company looking for a new accountant the amount of work and determination it takes for that accountant to be able to do what AccNet did for Hempco. It is not the norm. I would not hesitate to recommend AccNet as your preferred accounting office to use no matter how small or large your business is. They will do whatever is needed to get the job done, which in our case meant doing the benchwork in our path to a successfully traded public company.
Where do you see yourself in 10 years?
Find out how AccNet can help take you there