Having a killer cannabis business plan can set you up for success from the start. So, don’t just take your advice from any average joe, get your info from the source. Here we’ll cover the top tips to be successful in cannabis when setting out to create your business plan.
Organize Your Model
Before getting started, no matter how good your product looks on paper, you’ve got to have a successful model or plan backing it up. Which makes the choice of your business model for profit, that much more important.
Does your product make most sense being business-to-business? Business-to-consumer? Are you completely digital? Or, are you only offering services? What direction makes the most sense for the highest sales or how will you market for the highest exposure?
Regardless of the answers to these questions, the model for your business is just as important as the product or service you’re pitching. By definition, it outlines the plan that will take you from pitch to profit. So, designing the model that will get you there is quite literally your path to success.
Here are the essential elements to consider and explore, when deciding how to choose which business model will work best for your Cannabiz:
- Market Capacity or Potential
- Value Proposition vs Competitors
- Target Niche and Ideal Customer
- Channels of Distribution
- Strategic Partnerships
- Possible Streams of Revenue
For cannabis, like many industries there’s a few specific categories or sectors that your business will likely be entering, too. The most common being –
- Ancillary Services (i.e. payment processing, software)
- Retail Facility (Dispensaries)
- Wholesale Cultivators
- Infused Product Makers
- Testing Labs
- Consumption Lounges
- Event Planning
As soon as you’ve done your research on which sector you plan to enter, and how to structure your model for success… it’s time to get into the nitty-gritty of a business plan outline to get you on your way.
A Glimpse into Your Biz
The beginning of your business plan will include an overview, objective, or a general executive summary that lays out the goals of your brand or biz. This information should be clear and concise, and of course written for those who understand cannabis, and those who don’t. Since cannabis is a fresh industry overall, always assume your reader is a cannabeginner, and might not know as many in’s and out’s of the market.
With that said, don’t drag on for too long – this is your opportunity to catch the attention of your investor, or the regulator you’ll be submitting your plan to. In any industry, many plans get tossed based on this beginning summary alone. So be sure to cover your bases here, including the amount of money you’ll be seeking, and how you plan on making the return, if financial or investment-based.
To understand how your business will best operate, you’ve got to understand the businesses that already exist AKA, your competitors. In any good business plan outline, you’ll want to include in-depth market analysis to show just how you expect your Cannabiz to align. Not only in today’s industry, but moving forward to the future. Even if you believe your cannabiz is completely unique – it’s typically frowned upon to say, you have ‘no competition’.
Instead, explore direct and indirect competitors and make sure you include both when discussing how you’ll differentiate your biz from theirs.
- Direct competitors are those who are competing in your exact market.
- Indirect competitors would be those who are similar but operating in another market.
For instance, if your business is an app that helps you search and compare prices for cannabis in a general area, an ‘indirect’ yet similar competitor might be ‘GasBuddy’ or ‘GoodRX’. Directly, a competitor would be ‘WeedMaps’.
Beyond the big picture, highlight recent trends you’ve identified and themes you plan to target. It’s best to touch upon the regulatory or legalities of the market and how you plan on navigating that for growth. The big idea market-wise is to show your path for success, and how your differentiation will get you there. This includes identifying your target market, and the persona your product or brand will be speaking to.
There’s no doubt about it – in business, money talks. This means no business plan is a plan, without discussing financials. Here, you’ll not only want to touch upon overall profit but also the topic of cash flow. Learning from the early pioneers of the cannabis industry, this is one area that most start-up cannabis brands typically struggle with at first. Making it especially important to address in your Cannabiz plan.
Take operating expenses, and potential income into consideration and work out the financial plan that fits the structure of your model. To do so successfully, make sure you outline the following key financial matters:
- Revenue Forecasts
- Sources of Capital or Financing
- Costs to Operate
- Start-up Expenses
- Projected Cash Flow
- Projected Profit & Loss Statements
Don’t’ forget, a picture is worth a thousand words, so it’s recommended to include as many charts or graphics visualizing your growth and success as possible.
Strategize to Operate
Last but not least for your cannabis business outline, is addressing the question – how will your Cannabiz operate from day to day?
Your operation strategy is key in taking your plan from start to profit, successfully. This should not only include your organizational structure, but detailed information about your team leaders or managers, and what expertise they bring to the table. Diversity is ideal, so your business has a wide range of specialized skills to help it thrive.
Don’t just think about the top-tiers of management, but consider every level of operation that will require a position to keep it running smoothly. This will show you’ve done everything to consider the best and worst-case scenarios, and you’re setting up a strong structure for smooth running operations day to day. If you’re using third-party vendors or distributors to keep your business operating, include that information along with the terms or cost of your relationship here.
Now that you have the know-how to create your business plan, what are you waiting for? With the expansion of legalization, there’s no better time than now to get into the cannabis industry. So, put that pen to the paper and create your business plan for your cannabis business that can lead you to Cannabiz success.
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