Cannabis has continued to grow in popularity for medical and recreational purposes, given its legal position in many parts of the world. The industry is currently experiencing a significant uptick, with more people eager to invest in it.
As far back as 2017, the legal cannabis sector in the United States generated a staggering $16 billion in total revenue. By 2021, this figure is predicted to increase by 150 percent! It’s no surprise that more people are considering entering the profitable business while it is still relatively new.
However, launching a cannabis business frequently necessitates acquiring finances. This is where the role of investors comes into play.
They will not, however, bet a dime on your idea, no matter how appealing it appears, unless you have a persuasive approach written down in black and white. This blog will teach you all you need to know about writing a cannabis business plan that will appeal to investors.
Let us start by understanding, what a business plan is:
What Is A Successful Business Plan?
A business plan is an important written document that describes and summarizes your company’s future. Cannabis enterprises, like any other business, should have a business strategy. Your business strategy and key goals should be described in the plan to move you from where you are now to where you want to be in the future.
- How will you grow the profitability of your firm, get more resources, or increase your assets?
- What strategies do you have in place to expand your target market?
- In one, three, or five years, where do you envision your company?
A business plan is required for anyone starting a new business. It can also be a useful tool for a company that is expanding in a new direction.
It’s critical to have a business strategy for your cannabis business, no matter how big or small it is. There are a variety of reasons why business plans are crucial, but it all boils down to being able to effectively convey your vision to lenders, suppliers, property managers, and anybody else with whom you are seeking assistance or hoping to establish a business relationship.
Developing a business plan for a cannabis company differs from developing one for any other industry. Marijuana businesses confront a lot of challenges that conventional businesses do not, such as funding issues. You’ll also need to study the marijuana laws in your state carefully to verify that you’re in compliance with all restrictions, as each state that has legalized cannabis has radically different legislation.
Reasons To Create A Full-Proof Business Plan
Writing a well-thought-out and well-organized cannabis business plan greatly improves your chances of becoming a successful cannapreneur. A good cannabis business plan can help:
- Determine whether or not your cannabis store has a decent possibility of making a profit
- Provide an estimate of your start-up costs, as well as the amount of money you’ll need to invest or finance.
- Persuade lenders and investors to fund your company
- Present an estimate of revenue (by defining your market — who your customers will be — and the percentage of the market you can expect to reach)
- Make money right away by developing a solid marketing strategy.
- Compete in the marketplace (by analyzing what your competitors don’t have), and
- Anticipate possible issues so you can address them before they turn into disasters.
What Should Your Business Plan Include?
A business plan should include the following key sections:
Effective Executive Summary
An executive summary must summarize the business plan and highlight the company’s mission and goals.
Business Description & Information
Your company’s structure is presented in the business description (sole proprietorship, partnership, limited liability company, etc.).
Pick The Best Location
For a cannabis business, location is crucial. Know who your target market is and whether or not your company would be welcome in a particular location. In some locations, cannabis is still considered illegal, so choose your location wisely. Do your homework and find out what kind of area it is and what its overall values are. This is crucial to your success.
Identified Target Market
Your business plan must clearly indicate your target market. This includes:
- Everyone in your area who is of legal age (total available market)
- People who can afford and are willing to pay for your cannabis product or service (ideal clients)
- The actual clients you believe your business will be able to reach in its first few years of operation
Your marketing and sales strategy must focus on your ideal customer. You can figure out who your ideal consumer is through demographic data and social media.
Remember that your ideal customer is determined by your business model. If you specialize in production, for example, your ideal clients are enterprises involved in processing processes rather than individuals.
It describes how you plan to promote your company and generate additional leads.
Competitor Benchmarking & Analysis
It must demonstrate your market knowledge based on research as well as your competitors’ best practices.
Product Planning, Service Design And Development Strategy
It is all about choosing the right products at this stage in your business plan. It will be based mostly on how well you understand your target demographic and market.
The goal is to make a menu based on the preferences you discovered while researching your target market.
For example, you might learn that a cohort within your target audience prefers cannabis gummies but will typically choose cannabis chocolates if the product they want is not in store.
Suppose you’re building a cannabis dispensary in an area where the majority of the residents are millennials.
In such instances, you might want to think about different product categories or how previous news cycles, such as coverage of vapes, may have influenced buying decisions.
Once you start thinking about which brands will be on your shelves, it will surely become more specific.
Creating An Organizational Plan: For Successful Team
Who will be the most important people in your company? It’s an important question to think about because the answer will differ based on the type of business plan you’re writing.
A conventional chart and team background information, such as qualifications of lead employees in marketing, finance, legal, operations, management, and other divisions, should be included in your business plan.
Do you wish to go into further detail? List any additional relevant abilities required to successfully launch and operate the business. Defining these will help you make better hiring and employee evaluation decisions, saving you time and money in the long run.
Financial Data, Extensive Planning And Key Considerations
Explain why you have a favorable outlook and how you plan to produce money. If you’re looking for finance, a funding request should be added to explain how much money you need and how you plan to spend it.
If necessary, you can submit additional documents such as credit history, permits, licenses, and resumes.
Your income statement, cash flow projection or statement, and balance sheet must all be be a part including your financial factors. This should try to give you a clear image of your company’s current value as well as your ability to pay your debts and make a profit.
Defining Timeline & Setting Milestones For A Robust Business Plan
Last but not least, no strategy is complete without establishing a schedule for operations as well as the goals you want to attain. Here are a few to consider:
- Gaining funds required to operate.
- Acquiring property for operations.
- Licensing and permits.
- Purchasing all required software and equipment.
- Hiring employees.
- When marketing communications will start.
- When you expect your first customer.
Setting these goals ahead of time can help your company focus on defined business objectives that are important to your success. It will also make it easy for investors to see the progression of your business plans before they start.
Carve Your Way, Before You Start!
Starting a cannabis business might be difficult. It will, however, necessitate the appropriate resources, effort, and a good business plan. It’s a fantastic opportunity for advancement and achievement. Before attempting to make a niche for yourself in this fascinating field full of possibilities, it is critical to be aware of the legal elements of operating in the cannabis market.
If you need a solid business plan for your business, Cure8 can help you connect with the right agency. Contact our expert team today!