Issuing a Business Plan
A well-drafted business plan is crucial for your firm. Keep reading if you are eager to know how it can help you land investors and guide the take-off of your company from the ground!
Issuing a Business Plan
A business plan is a necessity for every cannabis business. The simplest form of a business plan is to view it as a business guide. It lays out the roadmap and highlights broad goals as well as specific objectives that you will need to achieve in order to run your business and make it grow. Every firm in the world needs to have a proper BP to know which activities to pursue. Read on if you want to master how to issue the perfect business plan which will make your cannabis business thrive!
What is a business plan?
A business plan is a document written in a formal tone that entails the business goals, methods, and objectives of an organization. It also includes methodologies on how to achieve those goals and attain certain benchmarks. Furthermore, it includes a timeframe for the goals to be completed.
First of all, BP does not usually need to be long and formal like a term paper. That type of granularity is not used in the business world anymore. Even though a firm can gain several benefits by developing as well as following a business plan, only some specific areas require a formal document to convince potential investors or receive the approval of a commercial loan.
A cannabis-related company also requires a business plan, just as much as any other company in the world. However, since it is a newly formed industry, cannabis firms only require lean business plans for internal usage. Most business plans of the firms operating in the cannabis industry consist of simple bullet-point lists and financial projections. However, having a lean and relevant plan is still a crucial issue for these businesses.
How to write a perfect business plan
BP can have several motives. It may be to provide direction to the company or attract new investors to grow in the market. It is crucial to define that motive and your target audience before you begin. However, writing a perfect business plan for a firm that is operating in a newly emerging industry is still a very difficult job. For instance, a brand selling cannabis may face difficulty finding reference documentation of previous business plan blueprints since cannabis has only recently been legalized by the US government. In order to write a perfect business plan, the firm should follow a set of steps described below:
The core step to take is researching the market, analyzing your product and determining the objective. Many business owners do not realize that it is the research that goes into the business plan that guarantees success. If a cannabis-producing company is looking to launch its product into the market, it needs to research its product niche (how it is different from the competitors’ products), as well as the market (is there a significant demand for the product?).
It is the responsibility of the stakeholders to develop a wide overview of the cannabis business as well as broader industry insights. A good starting point is to read and review everything that was recently published about the cannabis industry in the US and look for first-hand insights from customers.
- Define a purpose for the plan
BP does not just sum up the objectives of the business; it also describes the nature of the business. It defines the strategies the company will use for sales and marketing. Furthermore, it details the financials which will drive the business (start-up costs, running-costs, capital investment, and break-even analysis). You need to consider all the contingencies that your firm may experience and plan how to overcome them. For instance, there are still legal implications that a cannabis-producing company needs to resolve before it can start operating. The business plan should address all these issues.
- Develop a company profile
The company profile needs to highlight the history of your business, goods or services, your target market/audience, and accessible resources. For example, a business plan for Mycron Extracts, a cannabis product brand, would contain the profile of the company, which would define its product, the target consumers, and financial model. Specifications of the product would include details like the aesthetic appearance on the website and for the product itself. The target consumer section would describe the people who would buy the product and how it would improve their quality of life.
- Determine a strategic marketing plan
Marketing is complementary to a business plan, which is why it is such a crucial element. This will entail marketing objectives like introducing a new product, extending market offering over time, boosting the sale of a product, and forming on-going contracts with long term customers. For instance, Genesis Grow Corp specializes in providing different types of cannabis according to the demand of its clients. Some clients may want a lower percentage of CBD and a higher percentage of THC while others may want the opposite of this. The marketing plan of Genesis Grow Corp would need to include flexibility while growing cannabis to meet the demand of their clients. This flexibility needs to be highlighted within the marketing and business plans of Genesis Grow Corp for it to gain and maintain clients all over the US.
- Make it adaptable
If you are to just start off your potential company, you will need to represent your BP to prospective angels and vendors. Financial back up might come from everywhere. It might be investment bankers or venture capitalists. The cannabis industry is a rapidly growing business in the US, which means that a lot of entities are considering investing in it. In order to motivate them to invest in your company, they will need to be able to understand it. That is why your business plan needs to be diverse enough to cover the specific interests of each entity. While bankers may be more inclined towards reading the financials of your cannabis business, venture capitalists will be attracted to the basic concept of your business.
Four sections every business plan must have
Some sections are necessary for a business plan to be considered complete. These sections are then augmented by additional sections, depending on the nature of your cannabis business and target market. The four sections which your business plan must include are:
- Executive summary
This is a short section of the business plan which summarizes the overall concept and product. It should include the total capital market for your cannabis business, main marketing activities, product specifications, and a description of the target market. It must include every important value in the plan. This is very important because many readers will only go further when they are convinced by this section. That makes the executive summary a do-or-die part of your BP.
- Marketing plan
If you about to start a cannabis business, your primary concern is to get potential customers. The rule is simple here: no demand means no sales. This section should include a marketing analysis of the cannabis market, a competitive analysis of the existing players, and specific market actions.
- Key management factors
If you are entering the cannabis industry, the chances are that you have few assets and limited history in the business. That is why this section should focus the reader on the potential benefits of investing in your venture.
- Finance plan
Financial projections are also one of the most crucial aspects of your business since it is the only section that proves that your cannabis business is viable. It must include the capital, start-up costs, running costs, and break-even analysis. Potential investors are focused on making a profit and this section will paint a picture of what they can expect.
Reasons you need a business plan for your cannabis business
- To determine the feasibility of your business
After being written, a business plan will let you know if your idea is feasible or not. It will act as a safeguard to show if financial or marketing activities are realistic.
- To make sure your business is successful
The business plan will direct your attention to the most important operational and financial objectives. It will help you smoothly start running your cannabis business.
- Gain investors
A well-drafted business plan will even help you land potential investors. You will be able to receive debt financing from banks or convince angel investors about your long-term success.
- To help you manage your new venture
Walking into the newly developed cannabis industry can be confusing. A BP will break down the objectives step by step making it more manageable for you. It will help prioritize the objectives of the business according to their importance.