Have you been considering starting your own medical marijuana business? Considering how fast the industry is growing we can’t really blame you. In fact, over a quarter of U.S. medical marijuana dispensaries are currently reporting earnings of a million or more per year.
Nonetheless, even in a budding new industry with a lot of potential for growth, no business becomes a million-dollar business overnight. Building a successful marijuana business requires a lot of hard work, dedication, and a solid business plan.
While mary jane continues to inch closer to the end of prohibition each year, the stoner stereotype still prevails for many in the business world. A well-written business plan will help you display your professionalism and overcome the stigma attached to cannabis. Success is just a business plan away and we’re walking you through how to write one from start to finish.
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Before putting your pen to the paper, there are a few things you’ll want to first consider. As you approach your business plan, keep in mind that the primary purpose of a plan is to attract investors, leaders, and other potential stakeholders to your company.
First impressions matter and what you decide to write should therefore leave a good one. Creating a business model canvas beforehand often helps in mapping out your business vision so that every aspect of your startup is fully fleshed out before writing.
If you’re not familiar with business plan documents, you may want to first familiarize yourself with the format. The U.S. Small Business Administration offers an online business plan tool. The business plan tool allows you to view various elements of a plan and even draft up your own. Once you have a good understanding of what a business plan is, you can begin writing your plan with the following elements.
All business plans start with an executive summary. This section is intended to provide a broad overview of your company. The executive summary is possibly the most crucial part of your plan.
Investors sift through dozens of business plans a month and often use executive summaries as an indicator of whether or not they should continue reading a plan. The most successful executive summaries are short and concise. Ideally your summary should be no longer than a page.
Additionally, you’ll want to include the amount of money you are looking for if you are seeking funding, as well as, how you will use it, and what you are willing to offer in return. It would be beneficial to include a poll displaying the growing demand for medical marijuana for investors unfamiliar with the industry.
The products section is very straightforward. In this section you’ll want to talk about everything you plan on selling. Make sure to differentiate between products being produced in-house and products being purchased from elsewhere. For products purchased elsewhere you’ll want to state where you plan on obtaining that inventory from. Finally, you’ll need to mention your gross margin estimations for all of your products.
In the market analysis section, you’ll provide an in-depth overview of the medical marijuana industry. You should include things like the size of the market in your geographic location and the size of the segment you’re targeting.
You’ll also want to make note of the business’s current competitors and others expected to enter. It’s worth touching on the regulatory and legal implications of operating in the cannabis industry as well.
Organization & Management
The organization & management section will be used to describe the organizational structure of your business. You’ll start by highlighting you and your team. Discuss the business owners and the traits they possess deeming them qualified to run a marijuana business.
Pick your business partners from a variety of backgrounds to ensure partners bring highly specialized skills and experience to the table. Other key employees should also be mentioned, whether they be pharmacists, sales associates, store managers, security staff, etc. While not for investors, it’s good to include the various tasks each employee will be held accountable for so positions are clearly defined for planning purposes.
The overall health and growth of your company is dependent upon your company’s sales strategy. This section should include distribution, pricing, and advertising strategies.
In building your marketing strategy you should include things like traditional advertising campaigns you’ll undergo, social media presence, cannabis related trade shows you might attend, etc. As you develop your strategies consider your competitors’ strategies and how you can improve upon them.
Growth & Development
Your growth and development plan gives investors an opportunity to visualize the full potential of your business. The goal is to prove that you are looking ahead and have considered how you will provide a return on investment. Utilize this section to mention any additional market segments, products, or locations you may wish to target in the future.
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The backbone of your business plan will be the financial projections section. No investor will willingly fund a business without first viewing a sound financial plan. Your plan will break down into two components: expenses and income.
There are two categories of expenses that will be included in your plan. Start-up expenses encompass the costs you’ll incur to get your business up and running. Conversely, operating expenses will encompass the ongoing monthly costs you’ll incur to keep your business running properly.
Expenses are easy to calculate, but income is a little harder to estimate, especially for a new industry like the medical marijuana industry. Give your best estimation of the income you plan to accumulate and include an explanation on how you arrived at the numbers you did.
No matter the countless hours you put into estimating your budget, your numbers will never equate to what your real financial books end up looking like. For this reason, it’s recommended you add a 20-30% cushion to your budget for contingent risk tolerance.
You can give yourself a nice pat on the back once you’ve finished writing your plan. However, there is still work to be done after you’ve finished. Set aside time for proofreading and revisions. It’s important your business plan is a good one, because it will ultimately become your company’s official resume.
Doubting your writing abilities? You can start with a medical marijuana business plan template. With a winning business plan in hand, it’s time to start identifying potential investors and developing pitches for them.