Are you planning on starting a cannabis dispensary? Great idea! The retail cannabis industry is currently booming and amazingly lucrative. But the most successful dispensaries don’t succeed by accident. These days, successful cannabis entrepreneurs are the ones with the insight to create a killer business plan.
Here’s how to write one.
Dispensary Business Plan Basics
Before you start writing your plan, there are a few things that you want to consider. It’s important to remember that the purpose of a business plan is to show your investors and stakeholders how you plan to create a profit.
First impressions go a long way in any business, and that can be especially true for a new industry like cannabis. You’ll want to have every aspect of your business thought out before you begin putting pen to paper. And if you’ve never written this type of document, it’s a good idea to familiarize yourself with some examples before you draft your very own.
When you look over business plans, you’ll notice that components can differ from plan to plan and industry to industry. You’ll need to use your best judgment to decide which elements to include and which parts to leave out of your dispensary plan. The SBA website can be a huge help here.
Here is what we recommend including in your dispensary business plan.
Problem and Solution
No matter what the industry, every profitable business finds success by providing a solution to a problem. You’ll want to identify a problem and describe how your dispensary offers the perfect solution.
Maybe all the dispensaries in your area sell the same products, and your dispensary will offer more variety for adventurous customers. Or perhaps the dispensaries in your area aren’t considered “high-end,” and your dispensary will provide a touch of luxury and exceptional customer service.
Figure out what sets you apart and how you will provide a solution to an issue your potential customers are facing.
Now that you’ve explained the solution you are offering, your next step is to identify who the solution will benefit – your target market. A target market refers to a group of potential customers that your dispensary will sell to and where you will direct your marketing and branding efforts.
The idea is that you can’t target everyone, so you’ll want to identify a specific group of people with similar characteristics like geography, demographics, buying power, and income. This is also known as identifying a buyer persona.
Think of a character that represents your ideal customer. What do they need? What do they like? How can you provide them with an experience that will keep them coming back time and time again?
The location has a lot to do with who your target market will be and how you can serve them. Location is also an essential factor when it comes to local and state laws about cannabis dispensaries. You need to know where you can legally operate in your area, and this will take some research into zoning laws.
Many states and local communities don’t allow dispensaries to operate within a certain distance from schools, government buildings, and churches. When scouting for a location, take some time to speak with local authorities on zoning to make sure you choose a spot where you can legally operate.
And just because an area is compliant with local zoning laws, doesn’t mean it’s the perfect location for your business. You’ll need to make sure you choose a place where the community will be accepting of your business. Is the area right for your target market? Are there many other dispensaries in a close range? Your dispensary business plan needs to address every aspect of the location to avoid potential pitfalls.
Your business plan should have a list of competitors and what makes them competitive. Lay out how your dispensary differs from the competition and how you will succeed in the face of a potentially saturated market. What makes you stand out? Why will your target market choose you over the rest?
Products and Services
This section of your business plan is relatively straightforward and allows you to talk about the types of products you will be selling. What products will you offer that will solve the needs of your target market? Do you plan on manufacturing your own products? Will you be providing services like delivery?
Marketing and Sales
A good marketing strategy is crucial for gaining a customer base and growing your business. This section of your business plan will lay out your general marketing approach to develop your dispensary brand. Take a look at what your competitors are doing and what you can do to improve upon their strategies.
Once you have an overview of your marketing direction, you can start to dive into the specifics of your marketing channels and how you will make them work for you. Are you using email marketing? Social media? SEO? How are you going to use these channels effectively? How are you going to get customers to find, engage, and shop at your dispensary?
It’s crucial that you don’t overlook this step and that you give it thorough consideration—especially if you’ll be seeking investors. You want to show how you’re going to attract your target audience to your store and sell to them. Without this, you can have a great shop but no customers.
This part of your business plan explains the physical aspects of how you will operate. It will cover things like your facilities, equipment, technology, security, and personnel. Dispensaries need a storefront where customers shop and purchase products, as well as areas for storage. And this section will explain everything about your physical space, property, and layout.
This is also the section you can continue your discussion on compliance that you started in the location section. You’ll explain how all of your dispensary operations will be in compliance with local and state laws.
Who are the people that will make your business successful? This includes the day to day staff as well as those in it for the long term. Describe everyone who will be involved in your business, including owners, consultants, employees, partners, vendors, and extended staff. Include information about how your team will use their experience and expertise to make your business a success.
You can add in your hiring plans, positions you will need to fill, what type of experience and education you are looking for, and how much you plan to pay your employees.
The financial section of your dispensary business plan is one of the most important. Why? Because you will be using your business plan to secure financing, so the numbers matter a lot! This is the section of your plan where you don’t want to be vague or overpromise on what you can deliver to your investors.
Draft a financial plan complete with financing, operating costs, revenue forecasts, budgets, projected profit and loss and cash flow statements, and breakeven analysis. Don’t forget to focus on cash flow, as many big cannabis companies struggle with cash flow issues.
What type of timelines and metrics will you use to gauge the success of your dispensary? Set start and finish dates, and targets for specific milestones for before and after the launch of your business. Try to set achievable milestones that emphasize growth and establish metrics to check the health of your company.
Now that you have laid out all the aspects of your business plan, it’s time to craft the executive summary. The executive summary will start with an overview of your business and the goals you will achieve. It is the place where you summarize all the key information so that the reader will have a quick reference without having to search. You’ll place this piece at the top of the document underneath your title page.
The executive summary should only include the most important key points of your dispensary business plan. Keep it short and straight to the point, but make sure it shows that you have put in the work to design a business that will succeed. And if you are going after funding, include how much money you are seeking, how it will be used, and what you can offer in return.
For investors who aren’t familiar with the cannabis industry, you can include some information on the growing demand for cannabis and industry trajectory. But make sure to keep it concise and easy to read.
Although it will take some time and effort to write the perfect cannabis dispensary business plan, the hard work you put into it will pay off. Entrepreneurs with a solid business plan are more than twice as likely to secure funding and grow their business than those without one. And a great business plan will make securing local licensing a lot easier.
For more information on building a wildly successful cannabis dispensary, check out our webinars. We cover everything you’ll need for your growing dispensary, including dispensary advertising, compliance, marketing, SEO, and more!