The cannabis industry is experiencing massive growth. If you are investigating starting a cannabis business, now is the perfect time. But before you do anything else, we strongly advise you to develop a cannabis business plan. Having a good business plan is an important requirement for concept development, business framework, state licensing and costs associated with your business launch. It is also the best way to attract investors to fund your business. Statistics show that entrepreneurs who have a business plan when they pitch their concept are significantly more likely to secure funding than those without business plans.
It also bears noting that a business plan is something that takes time to develop. This is not a post, nor are the actions included, that is meant to be glossed over.
There are many entrepreneurs that will spend months developing and reworking their business plans.
In this post, we walk you through how to write a marijuana business plan from start to finish.
1 – Executive Summary
A good business plan should start with an executive summary. This section is meant to provide a brief overview of your company. It introduces you, explains what you do and what makes your business unique. If you’re seeking funding, the executive summary should include the amount of money you’re looking for, how you’ll use it and what you will offer in return.
While every section of your business plan matters, the executive summary remains the most crucial, especially if the goal is securing funding. Investors are busy people who read through numerous business plans every day. Often, they first read the executive summary in order to decide whether or not to read the rest of the plan. If they do not find this section impressive, they’ll most likely discard the whole plan.
Most people think that an executive summary should be a summary of the entire plan. Do not make this mistake. Focus on the main aspects of your business and keep the executive summary short and concise. Ideally, it should be one page or less. It would be wise to include a poll demonstrating the growing demand for legalized cannabis for investors who are unfamiliar with the industry.
2 – Business Summary
This is where the actual body of the business plan will begin. A business summary includes the core of your business. Ideally, why and how you want to get started with the marijuana business idea. This should include a simple, but also honest answer of what you want to achieve by venturing into this business field, other than merely for profit.
Most investors look for a little social initiative in which to invest. For instance, a promising association with a local charity would prove great business value, not to mention the social services you would achieve through such a venture. Such little initiatives that not only increase your standing as a business but also contribute to much larger goals in the society are what most modern investors prefer to put their money into.
Your business summary should contain the following details:
-The name of your company
-Your business inception idea
-The names of the owners/partners
-The proposed location of the business
-The proposed business structure
3 – Organization and Management
This section outlines the management structure of your business, with the primary focus being you and your team. Begin with the owners and talk about how they are qualified to run the business. Mention other key employees as well, including the accountants, pharmacists, store managers etc. Remember to include any key qualifications the members possess deeming them capable of running a marijuana business.
4 – Products and Services
This is a good opportunity to talk about what products you’ll be selling or what services you’ll be offering. Key points here include whether you’ll be buying your products or manufacturing them in-house. If you intend to buy your products elsewhere, you should state how you will be obtaining them. Finally, you should mention the gross margins for each of these products.
5 – Market Analysis
As you already know, you should carry out extensive market research before you even begin writing your marijuana business plan. Any business plan that puts in time, money and effort to carry out comprehensive market research has a good foundation that others don’t. The underlying code of sales is that you should always know your customers. You have to be able to identify the section of the population that makes up your main customer base. That’s why a lot of research needs to go into writing this section of your marijuana business plan.
Basically, this section should answer the following questions:
-Who are your customers?
-Who are your competitors?
-What plans do you have for your business over the next five years?
It’s also worth mentioning the legal and regulatory implications of running a cannabis business in this section.
6 – Sales Strategy
Here’s your chance to describe your sales strategy. Begin by discussing your specific approach. Lay out your plan for promoting your business. Give some general ideas of how you intend to market your business. Talk about the specific sales channels, which can include advertising, PR, creating content through writing, to mention a few. We suggest having both an online and offline sales strategy, and a plan to effectively utilize social media.
7 – Growth and Development
This section gives investors an opportunity to visualize the potential of your business. The goal is to prove that you are future-oriented and have considered how you will provide maximum return on investment. Use this section to mention any additional products, services or locations you intend to target in the future.
8 – Financial Projections
All the above sections are ultimately aimed at making this section attractive. The financial projection of your business will tell the investors whether you have a reliable business going forward. The current stream of revenue, as well as the current stream of expenditures, will dictate if the business will be financially viable.
-Start-up funding: This will include any initial funds you might have received from other investors or banks.
-Projected Profits/Losses: This will include the numbers for expected profits/losses for the next three years.
It’s a general practice to mention the projected profits/losses before taxes, interests and depreciation.
The Wrap Up
In conclusion, it is clear that a tremendous amount of time and effort goes into the writing of a cannabis business plan. Hasty preparations should be avoided! No potential investor will consider a shoddy business plan. However, if you follow the tips mentioned in the post, you will develop a winning marijuana business plan that will be attractive to investors as well as partners. Take away message – take your time and produce thorough research that will translate into interested investors and a business plan you can rely back on for some time to come.