Being The Solution
At their core, any successful business plan outlines a problem—like a lack of affordable access to cannabis, or the lack of a competent and intuitive cannabis delivery service in your area—and how your business will be the solution.
The good news is that there’s nothing inherently challenging about this prospect; literally anyone can go out, spend time researching and observing the existing dispensaries in their area, and then draw some useful insights as to what the unmet needs are.
The challenge, such as it is, is getting out of your own way. That means dropping your assumptions about why your dispensary will be better than the competition—We’re friendlier! We’ll offer a better loyalty program!—and actually looking at the landscape objectively.
We really can’t emphasize this simple exercise enough: It sounds simple, but for budding entrepreneurs with stars in their eyes, it can present a real challenge. Meet it head-on, and you’ve already passed your first big test.
Know Your Demographic
When they’re just starting out, it’s common for new entrepreneurs to hope that their business will appeal to everyone. And for some mega-enterprises—the Amazons and Googles of the world—that’s proven to be a winning strategy. But for the rest of us, the truth is very different: The vast majority of businesses succeed by appealing to a niche market. And the key to understanding that niche—and then owning it—has to do with knowing your customer base (sometimes known as your “target market”) inside and out.
Who is your target market? It may not be who you’d assume; the spectrum of cannabis users ranges from Generation Z to Baby Boomers.
Look at demographic trends and surveys about cannabis use. Who are you best positioned to reach out to in your area, and why are they interested in cannabis? Is there an unmet need you can speak to? Knowing who you’re trying to reach—and then speaking to them with the greatest possible specificity—is the key to effective marketing (a point we’ll return to shortly).
Location, Location, Location
“Location is everything,” goes the old adage, and it’s never been more true than in the cannabis industry. Your business plan will need to highlight both the places you want to be—centrally located, close to amenities and major thoroughfares—and where you don’t, meaning places prohibited by any local ordinances that may bar dispensaries from operating near schools, parks, or other locations.
Shining a spotlight on the features your dispensary needs in your business plan will help you narrow down potential locations, and it will signal to your partners that you’ve done your homework. As a jump-starter, some of the features you’ll want to consider include:
- Secure warehouse or storage space
- Ample floor space for a welcoming and natural customer flow
- Inviting bathroom space for customers
- Processing/packaging space
- Shipping and receiving area
- Functional utilities, including high-speed internet
Opposition Research, Becoming a Stockist
This step should be part and parcel with your initial research of your physical location and your demographic, but it’s important to break it out into its own section. What needs and populations are existing dispensaries serving, and how will yours better meet them?
This feeds into the next section: What specific products will you offer? Just as it’s not enough to offer “the best products at the best prices,” you’ve got to think in terms of being a “stockist,” a British term that’s lately come into favor here in the US. In essence, it means a retailer that offers products of a highly specific and targeted nature. It sends an important message to consumers: I know just what you’re looking for, and I’ve stocked my shelves accordingly.
In turn, focusing your cannabis dispensary business plan on this important facet sends a message to your stakeholders: I’ve done my research, and I know exactly what my target market is looking for.
Getting Nitty-Gritty with Operations
Describing the details of how your business will operate may sound nit-picky and time-consuming, but don’t treat this like a chore. Instead, use it as your opportunity to demonstrate your top-to-bottom attention to detail and your grasp of every single aspect of your business. It’s essential to being a committed and engaged owner, and it’s essential to your partners and stakeholders.
What should this section include? Think of it like a list and description of all the physical aspects of the business: facilities, equipment, technology, security, and personnel. Make it as complete as possible, detailing both the storefront and backroom, storage and receiving areas.
This is also a good place for to continue to discuss compliance. You’ll use it to explain how all of your operations will be in compliance with all applicable local and state laws.
Meet the People!
Of course, the physical details of your dispensary aren’t much without a staff to make it all work together. What specific staff do you need to make your dispensary hum? In addition to listing the necessary positions, take a moment to talk about the qualities you’re looking for in your staff.
Trust us: This is as much an exercise for you as it is for the folks you’ll share your business plan with. The better mental image you have of the kind of people you’ll want to work in close proximity with, the better shape you’ll be in to actually find and hire them. And please, please: Do not leave out the all-important topic of social equity implementation. It’s good for our society and it’s good for your bottom line.
Need some idea-starters? Begin here.
Running the Numbers
This is another big one. When you’re securing outside funding—or even tackling the all-important task of finding a bank to work with—you have to be extremely specific about your financial picture. Overpromising to friends and family is a potentially humiliating position to be in, but believe us: Overpromising to banks and investors is a lot, lot worse.
Show every detail about your financing, your projected operating costs, revenue forecasts, P + Ls and cash flow statements. This last one is a biggie, because many cannabis startups come up hard against the issue of cash flow, particularly in that critical first year of operation.
How will you measure and quantify success or failure? You can’t wait til you open your doors before you begin planning for and tracking essential stats about the health of your business. Some Key Performance Indicators (KPIs) for dispensaries include:
- Amount of foot traffic
- Daily sales
- Average transaction total
- Units per transaction
- Average unit price
- Gross and net profit
- Enrollment in the loyalty program
- Opt-ins for marketing messaging
- Online vs. in-person sales
Cannabis Dispensary Business Plan Executive Summary
This part of your dispensary business plan may be the one that gets read most, but you’ll save it for last. Why? As an overview of your business—containing key features and goals—it can’t be based on wishful thinking. Instead, study all the sections you’ve worked so hard to create thus far and then use their takeaways to craft a simple, clear, and easy-to-read summary.
What should you include here? Keep it to the essentials, and if you’re seeking funding, include the amount of money you’re looking to raise, how you’ll use it, and what investors will receive in return for their financial support.
This is a good place to talk about the projected growth and revenue of the cannabis industry as a whole, but remember to keep it short and sweet. The idea is to craft a document that demonstrates your knowledge and commitment so that you can move on to a deeper conversation with potential stakeholders and partners.
Understanding the Marketing Landscape
Last (but certainly not least), there’s the question of how you’ll spread the word about your dispensary. We don’t need to tell you that simply opening your doors and hoping for the best isn’t a recipe for success. Because traditional advertising channels like billboards is often heavily restricted, cannabis marketing more typically leverages the power of digital marketing instead.
And guess what? Digital marketing works. As we’ve pointed out before, surveys demonstrate that businesses made an average of $2 for every $1 they invested in Google Ads. Additionally, 37% of shoppers report that social media content inspires their purchases. The numbers don’t lie: Digital marketing isn’t the wave of the future; it’s here.
Want to learn more? We’ve helped countless dispensaries chart a course to success, and we know we can help you, too. And if you’ve got unanswered questions, just ask. We’re always here to help.