Developing a detailed business plan is an important first step to take when starting a business in the cannabis industry.
It can help you obtain proper licensing, or even convince potential investors to fund your company.
Although writing a good business plan for your cannabis company may seem overwhelming at first, once you have a plan for your plan (ha!) you’ll soon realize that it’s not all that difficult. Keep reading to learn how to craft a successful business plan for the cannabis industry.
The burgeoning cannabis industry is full of promise and future profit. Unforutantely, the infancy of the market and various compliance issues mean outsized risk. One of the first steps in alleviating some of that uncertainty is by thinking through and formulating a strategic business plan.
Most business plans share certain traits, but there are some specifics that come to mind when operating within the cannabis industry. More Specifically, business plan contents will vary based on the stage of your cannabis brand. Some types include startup, financing, expansion, pivots, and acquisition business plans.
It Helps Validate Your Business Idea:
The planning and research you do to write your plan will show whether or not your business is viable. By assessing predicted sales, revenues, cash flow, and income, you’ll understand what kind of return you can expect. This is the time to be honest with yourself and get realistic if it looks like your plan won’t pan out.
It Helps Clarify Your Strategic Plan & Goals:
Not only will a business plan validate your idea, but it will also function as the strategic plan for your company moving forward. Successful businesses often consult their business plans years later to assess the progress and whether or not they are meeting their goals.
It Forces You to Calculate All Expenses:
A business plan will also force you to get all aspects of your finances in order. Whether you’re funding the business yourself or looking for a loan, it’s imperative to know exactly how much money you’ll need.
It Can Help You Get Approved for a Business Loan or Investment
Lenders and investors need proof that your cannabis startup or expansion plans will eventually make money. A business plan helps convince them your business is worthy of an investment. Click here to find out where you can apply for cannabis loans or additional funding options.
There are a handful of parts that are essential for any cannabis business plan. As long as you include each of the following sections, you should be good to go.
Tip: Create an outline before you get started. Write out each of the following sections and include the basic information you want in each part. Then you can use that outline as a reference when you add more information to complete the plan. Start simple and then add more detail. Take it section by section so that you don’t feel overwhelmed.
1. Executive Summary:
This is an overall summary of your business plan. Keep it concise, but cover all major points. You should also make sure that it is well written and engaging so that readers are interested in learning more about your company.
Although you want this section to be first, it’s easiest to write this last after you’ve already worked out all of the details in your plan.
2. Company Outline:
Discuss who you are and what your company goals are. You’ll also want to detail the legal structure of your business, the history of your company, and a summary of your growth.
3. Product/Service Overview:
This is the section where your product gets the spotlight. Talk about what your product is and explain how it benefits the customer. You’ll also want to include information about your suppliers, costs, expected revenue, and any copyright data. Include pictures or diagrams to help your reader get a better visual understanding. You should also discuss what makes your product different and more desirable than your competition.
4. Compliance & Facility Details:
In order to operate a legal cannabis company, you’ll need to prove that you can pass compliance and facility regulations. This section will include details about facilities, technology, security, distribution, personnel, and more.
5. Market Analysis:
This is where you show off your knowledge of the industry. Discuss current research related to your cannabis product, your target demographic, and all past, present, and future marketing data for your product.
Now we’re getting into the nitty-gritty. Summarize your marketing strategy and plan for implementing sales. Detail how your product will be sourced and made, who you will employ for various jobs, how you will market your product, and how customers will find and purchase it.
Include a detailed timeline with thought-out goals and milestones.
7. Financial Plan: This is where you show off your knowledge of the industry. Discuss current research related to your cannabis product, your target demographic, and all past, present, and future marketing data for your product.
As you can see, there’s a lot of information necessary in your business plan. Ultimately, you’re trying to prove to investors or people reviewing your cannabis license application that you’re qualified. To do this, you must provide the following:
Professionalism: Nothing is worse than a business plan full of spelling mistakes and poorly explained information. Make sure that the plan is written professionally, and proofread it multiple times. You may want to consider hiring a professional writer and/or editor.
Credibility: You want to prove that you’re trustworthy and that you’ll be a good investment. Include details about why you are the right person for the job and why your business will be successful. Instead of simply stating that you’ll do your best, include quantifiable data and research that proves that your business plan will be successful in the current market.
Clarity: Be very specific about your plan and goals. Keep your projections realistic and write them in simple terms so there is no confusion.
Although writing a cannabis business plan may seem overwhelming at first, as long as you create a detailed outline and take your time, you should be able to create a successful plan. Consider enlisting the help of an accountant, other team members, and potentially a professional writer to make the process even more seamless.
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