There's so much to keep in mind when starting your own marijuana dispensary business. It's not just about what strains and products you're going to sell. Many, many things are critical to a great plan.
If this all sounds overwhelming, don't worry! We've compiled everything you should know, even what most plans out there don't cover.
Keep reading for Happy Cabbage's guide for making your next business plan.
How do I write the purpose of my cannabis dispensary in a business plan? What should it say? First, you should outline what you're going to do, how you're going to do it, and why.
You will want a section in your business plan on mission and values. These are critical before articulating other pieces of your company, such as a product or marketing strategy.
Let's take a look at some consumer-facing examples of mission statements and values that reflect the internal business plans developed by store owners.
San Francisco retailer Sava takes a community and equity angle, stating that they aim to offer suitable products for all consumers. They also strive to sell products that customers would recommend to their friends.
Basa, also in SF, focused more on aligning its values with a medicinal perspective on cannabis.
Oregon and Massachusetts retailer Diem emphasizes the importance of their in-house brand instead of the retail angle other dispensaries may traditionally take.
These are a few ideas to spark your creativity. Of course, you'll probably format these into sections with a bit less prose, but don't be fooled.
These principles exist in front of consumers as they do behind the scenes in your dispensary business plan.
Your mission and values should align with your target audience, local laws, and whom you want to reach, all of which we'll discuss further in this article.
Figuring out your target cannabis market is one of the most decisive and challenging parts of your marijuana business.
It helps you figure out what services and products to offer and what marketing to do. You can start this portion of your business plan by getting as much information on the area you're choosing to open your storefront.
A critical piece to finding your target market is that you shouldn't define it as generally anyone that smokes weed. After all, there are so many different types of cannabis customers. You'll have to find a target that fits your business plan well.
According to a recent survey, there are likely more than 40 million cannabis consumers or roughly 12% of the entire population in the United States.
That means everyone, from Gen-Z to millennials to baby boomers and beyond, across all socioeconomic groups and cultures that are currently cannabis consumers today.
You'll have to start narrowing down your scope for whom you intend to reach. Begin your search for your target market with local research. Who is in your immediate vicinity?
Perhaps you’re planning to launch in an inner-city New York neighborhood. Maybe your consumers are parents in the suburbs, which could potentially change the way you choose to market in your business plan.
Maybe you’re the first cannabis business to open in a small Midwest town, which could come with its own set of challenges regarding education and outreach.
For example, suppose legal marijuana dispensaries are already flourishing in your city or state. In that case, it's unlikely that your potential local clients have never used marijuana products before.
That means that they shouldn't need much education to make them customers at your business. On the other hand, if you're the first retailer to open up shop in your area, it may be a different story.
You'll have to spend more time convincing locals to come into your storefront.
As you can see above, creating your target audience is all about understanding key demographics. These distinctions will likely influence the way you tailor your business to consumers.
A few demographics to pay attention are the following:
Another important factor is size. You want to go after the most populous demographic in your region, creating many opportunities for new and long-term customers.
Although size is not always the most definitive factor, it certainly comes into play when considering what kind of business you’ll want to start.
It’s always good idea to identify critical opportunities and risks before launching your business. Imagine investing in property, technology, and employees without a clear direction.
You’d essentially leave your success (and investment) up to chance without the foresight into potential challenges that you could’ve uncovered during strategic development.
So let's take a step back and look at the bigger picture with the help of these two tools.
A Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis is a strategic formulation tool for either formal or informal use.
It’s a commonly used analysis by entrepreneurs across every industry, so it will surely help with your business plan.
Consider the Strengths and Weaknesses as internal factors such as the organization's assets, processes, or personnel. On the other hand, Opportunities and Threats concern external factors, such as market, state law, and economic conditions.
The Eliminate-Raise-Reduce-Create Grid is another analysis for identifying opportunities and potential routes for scaling a business model.
While the SWOT focuses more on internal and external market conditions that your business plan should acknowledge, the ERRC Grid outlines how your business plan model will respond to those factors.
Completing this grid will help you create a unique position in the legal market that's informed by how your business plan engages with cannabis retail industry standards.
It's an excellent exercise for establishing differentiators, unique selling propositions, and guiding a plan to scale in the future.
Who will be the key players in your organization? It’s an important question to consider as it can vary depending on the type of business plan you’re developing.
Your business plan should have a traditional chart and team background information, such as qualifications of lead personnel in marketing, finance, legal, operations, management, and other divisions.
Do you want to elaborate more? Also list other relevant skills needed to launch and operate the company successfully. Defining these will inform your hiring and employee evaluation, saving time and money throughout the process.
At this stage in your business plan, picking the best products will depend primarily on how well you know your target audience and market.
The goal here is to create a menu based on preferences you’ve identified while researching your target audience.
For example, you might learn that a cohort within your target audience prefers flower but will typically choose hash if the brand they want is not in store.
Alternatively, suppose you're opening up your cannabis dispensary in a neighborhood with predominantly millennial consumers.
In that case, you might want to consider offering other product types or how past news cycles— such as the coverage on vapes— might impact purchase decisions.
It undoubtedly becomes more granular once you start planning what brands will line your shelves.
Cannabis brands have target audiences just like your business, investing in marketing communications designed to reach that specific communities.
Like what we mentioned above, you’ll want to pick brands with an affinity or marketing for your target audience. That way, when a potential customer enters your store, they’ll likely recognize and purchase a product they’ve seen or tried before.
Brands might focus on marketing their products towards women and people of color.
Others may take a more generalist approach or focus on the medicinal perspective of cannabis than being lifestyle-oriented.
You can see how choosing certain cannabis brands, and products can influence what a customer recognizes and decides to buy when coming into your establishment.
How will you choose to market your business plan? The answers could vary a ton based on whom you talk to. Here are some key tips for writing the marketing strategy in your business plan.
Clearly define your budget and the investments you choose to make. The more granular to get with deciding what marketing to do, the better prepared you will be to ensure tracking of return on investment.
Conduct diligent research into what channels you’re planning to activate. Start with questions like what social media platforms does your target audience use?
Where can you deploy cannabis advertising? Many platforms restrict cannabis businesses from marketing; so, make sure you know how you plan to use them before going live.
Google My Business and Maps are two services many consumers rely on for choosing where to shop in their area. You’re going to want to have a plan for how your store will use this platform in its first year.
How will you communicate with your customers once they have purchased from you? Software like a dispensary text marketing platform can help retailers send targeted communications to proportions of their customer base, resulting in higher open, click, and conversion rates.
As it does for all dispensaries, your return on investment from marketing will matter to the success of your business plan. You're going to want to include how you intend on tracking each channel, your key performance indicators, and how you will attribute marketing-assisted sales.
When planning how you'll raise funds, ask yourself the following questions:
These are the six most essential questions for business funding because they cover the scope of your fundraising plan, the need in the market, key players, and a path to action.
There are also two acronyms relevant to most fundraising strategies: BITS and SMART. BITS (Business-Individuals-Trusts-Statutory) will help you outline who will provide funds to your cannabis business.
SMART (Specific-Measurable-Agreed-Realistic-Timetabled) helps set objectives for raising capital in a way attainable by your organization.
Exit strategies are plans for when investors want to get out of the company. Starting dispensaries can be quite costly and potentially rely on long-term financial commitments some investors can't make.
These plans account for how venture capitalists can liquidate their investment based on specific criteria.
The options can range from demonstrating a proven need in the market to selling off the company to another investor or enterprise.
It is essential to have this in place so that every investor knows what they're signing up for before putting capital into your storefront.
Last but not least, no plan is complete without setting a timeline for operations and the milestones you wish to achieve. Here is a list of a few to consider:
Setting these goals in advance will align your organization around clear business objectives relevant to your success. It will also make it easier for investors to visualize the trajectory of your business plans before they go underway.
We know you love templates. So, we made a list of everything single one we could find on the Internet for dispensaries. Happy planning!
Pharm House & Sugarleaf
Beachside Health & Wellness
The Healing Center
Are your plans ready? Let us help you execute them!
Happy Cabbage makes technology for cannabis dispensaries. Schedule a demo to see our tools Polaris and Sirius and how they can help you run a better dispensary operation.