Business plans are necessary for companies operating in all industries. For businesses in the cannabis industry, they’re even more important because they can help you get a license to operate and capital to fund your business – whether you need that funding to get started or expand.
Writing a good business plan isn’t easy. It takes a lot of research, planning, and time to develop a plan that instills confidence in the people who read it. To help you get started, following are the key things your cannabis industry business plan should include.
The executive summary of your business plan is a summary of the contents and should only be a couple of pages at most. Keep it short and focused on the points that matter most to the audience who will read it.
What problem will your business solve and how? The problem-solution part of your business plan shows readers there is an unmet or under-met need in the market that you are uniquely able to fill. Moreover, your business plan should show that you can fill that need highly successfully.
Start by identifying the problem/need and quantifying it to the extent possible. For example, if you’re trying to open a cannabis dispensary in a specific town, think about what consumers in that town need and what you bring to the table that will make you more successful than any other dispensary.
Whatever you do, don’t say your business has no competitors. Every business has competitors no matter how new or innovative it is. If people aren’t buying your products or services, then they’re buying something else or choosing to buy nothing at all to meet their needs. Be honest and comprehensive when it comes to analyzing your competitors and proving your solution has to get to market as quickly as possible.
The market opportunity part of your business plan should offer a lot of data related to the market size, trends, growth potential, target customer segments, competitors, and the regulatory landscape.
You need to prove in your business plan that there is an opportunity in the marketplace for your business to grow and thrive. If the market is already saturated, come up with a way to carve out a profitable niche or surpass the competition with your superior products and services.
So far, your business plan has covered why your business is needed and why it has the opportunity to be successful. Next, you need to explain how you’ll do it with detailed plans that include timelines, milestones, and the metrics you’ll track to gauge your success against your goals.
You should include a marketing plan that covers five things:
- Position: How is your brand different from and better than anything else on the market?
- Product: What products will you offer to solve the need you identified at the beginning of your plan?
- Price: What will you charge for those products to successfully seize the market opportunity?
- Promotion: How will you promote your products and services in order to generate sales and revenue?
- Place: Where will you offer your products and services for sale?
The operations part of your cannabis business plan should cover facilities, technology, equipment, security, sales, distribution, and personnel. Explain the physical space your business will need to operate (and the specific property address if you’ve already acquired real estate for your cannabis business) as well as the technology, equipment, and staffing you’ll need to operate for the first year.
How will your business meet the compliance requirements to operate legally in the cannabis industry? Your business plan needs to show not only that you understand what regulations you’re required to comply with when you’re in operation but also, how you’ll ensure ongoing compliance with proper standard operating procedures (SOPs) and staffing.
Who will do the work to make your business successful on a daily basis and in the long term? This includes owners, leaders, advisors, key employees, extended staff, business partners, vendors, and consultants. Include the biographies of your team leaders, owners, advisors, and key employees to prove that you have the expertise to execute your business plan successfully.
In addition, describe the roles your team will have and the knowledge and experience they bring to the company that will add to its success. Be sure to include information about any investors in the company section of your business plan. The goal is to prove that you have a strong team that is highly unlikely to let the business fail.
The financial section of your business plan is arguably the most important. After all, most business plans are used to secure financing, so it’s not surprising that the numbers matter – a lot!
With that in mind, create a detailed financial plan complete with revenue forecasts, financing, sources of capital, operating costs, budgets, projected profit and loss statement, projected cash flow statement, projected balance sheet, and breakeven analysis. You should include charts, graphs, and tables in this section.
The appendices of business plans typically include more detailed charts and spreadsheets with additional financial information. For example, a sales forecast, personnel plan, pro forma profit and loss statement, pro forma cash flow statement, and pro forma balance sheet could all be included as appendices in your cannabis industry business plan.
A comprehensive business plan can get quite long, so think about your audience and modify the plan you present to them based on their needs and goals. The most important thing to understand is that a well-written business plan can make a big difference in whether or not you can secure a license and get funding to start (or expand) your cannabis business.
Think of it this way – which business would you rather invest in or grant a license to: one that has an amazing business plan showing exactly how they’re going to be successful and profitable or one that has a bare bones business plan which provides lots of promises but few details or explanations of how they’ll fulfill those promises?
Most often, investors and regulators will choose the former, so get busy and put together a business plan that shows your cannabis business is not just a solid investment but the best investment they can find!
Susan Gunelius, Lead Analyst for Cannabiz Media and author of Marijuana Licensing Reference Guide: 2017 Edition, is also President & CEO of KeySplash Creative, Inc., a marketing communications company offering, copywriting, content marketing, email marketing, social media marketing, and strategic branding services. She spent the first half of her 25-year career directing marketing programs for AT&T and HSBC. Today, her clients include household brands like Citigroup, Cox Communications, Intuit, and more as well as small businesses around the world. Susan has written 11 marketing-related books, including the highly popular Content Marketing for Dummies, 30-Minute Social Media Marketing, Kick-ass Copywriting in 10 Easy Steps, The Ultimate Guide to Email Marketing, and she is a popular marketing and branding keynote speaker. She is also a Certified Career Coach and Founder and Editor in Chief of Women on Business, an award-winning blog for business women. Susan holds a B.S. in marketing and an M.B.A in management and strategy.