Create a Winning Dispensary Business Plan: Follow These 10 Steps

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Eduardo Silva: Thank you once again for taking the time out of your day to join us — today's podcast we're going to be talking about how to create a winning dispensary business plan, we're going to give you 10 easy steps to follow. A lot of content to cover today, but it's going to be really instrumental if you do intend to be successful in the dispensary business — in many ways, we're going to be covering how to create a winning dispensary business plan, with 10 easy steps, showcasing your unique vision throughout the plan. Let's get right into it — for our agenda today, the key components your dispensary business plan needs to include, surprising pitfalls to avoid when launching a business in the cannabis industry, and when to toss out your plan and pivot to take advantage of a new market opportunity.

A little bit about myself, my name is Eduardo Silva, I'll be your host for today, I have 18 years of marketing and sales experience, have been part of the industry for over five years now, and I'm really excited to be your host for today's podcast. We are a dispensary digital marketing agency, solely focused in the cannabis space for the last five years, and we're really proud to have become partners with some of the biggest names in the industry, and happy to share some of our lessons learned along the way.

Let's take a quick moment to prepare ourselves for all the content we're going to share today, some housekeeping items first — cell phones, they're a great tool, really instrumental in the digital marketing space, but we do ask that you put them face down for the duration of this podcast, for the next 28 minutes. Also, if you're joining us from the Zoom interface, take a moment to familiarize yourself with the Q&A button, we do have live panelists on staff who can answer your questions at any point.

Free Resource: The Dispensary eBook

Eduardo Silva: Let's jump right in — first things first, we have an amazing resource for all of you. You can actually download our free dispensary eBook, a step-by-step, fully integrated digital marketing strategy tailored to cannabis businesses, you'll learn about the key digital marketing strategies to boost your revenue and scale your business.

If you want to open a dispensary and succeed in this industry, you will need to create a business plan that helps detail your path to success, and, at the same time, you will want to have every aspect of your business thought out before you begin putting pen to paper. If you've never written this type of document, it's a good idea to familiarize yourself with some examples before you start drafting your own — when you look over business plans, you'll notice components can differ from plan to plan, and in this industry you'll need to use your best judgment to decide which elements to include and which parts to leave out. The SBA website can be a huge help here, though we're going to cover the essential elements today, so you can begin drafting your notes and doing the required research to create a winning business plan.

Although it will take some effort to write the perfect cannabis dispensary business plan, the hard work you put into it will pay off major dividends — 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. We have a lot of ground to cover, so let's jump into the first step in creating your business plan.

Step 1: Research the Industry

Eduardo Silva: Before you get too deep into planning your perfect dispensary, you will first want to research the industry. The legal cannabis industry is huge and fast-growing in the United States, projected to add $92 billion to the economy this very year. To get started, research the industry by checking out trusted cannabis media outlets that focus on the business, finance, and entrepreneurship angles — from there, you'll also want to look at different industry analytics and reports, there are companies like Headset.io and New Frontier Data that create useful reports with plenty of insights into the industry. Basically, you want to make sure you have a clear understanding of how the industry works, so you can showcase how you'll position your dispensary within it — if you don't understand how things happen in the industry, and what's projected to occur over the next few years, your business plan may have a lot of huge holes, which you certainly don't want.

Finally, you'll need to spend some time researching the regulations regarding cannabis businesses — sometimes municipalities in legal cannabis states don't allow dispensaries, or limit where they can be located, and there are also limitations regarding where you can deliver, so if you're thinking of offering that as an option, be sure you can actually do that before spending more time and money on an idea that may not be legally feasible.

Step 2: Analyze the Competition

Eduardo Silva: In order to create a successful business plan, you need to know what others are doing — you may be competing for the same market share, so you'll need to identify what the competition is doing, who they're targeting, and how they may affect your potential business. Ultimately, your business plan should have a list of competitors and what makes them competitive, so getting this out of the way at the beginning, and allowing it to help you shape your business, can make the process run more smoothly. Consider how your dispensary differs from the competition, and how you'll succeed in the face of a potentially saturated market — what makes you stand out, why will your target market choose you over the rest?

Step 3: Understand Your Unique Value Proposition

Eduardo Silva: Which brings us to step number three, understand your unique value proposition. Steps one and two have given you further insight into the market, what's happening in the industry, and who you may be competing with — before completing these steps, you may already have an idea of what you want your dispensary to be, now, though, you can take that information and formulate what is truly going to set you apart and allow you to capture market share. No matter 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 product, and yours will offer more variety, or perhaps the dispensaries in your area aren't considered high-end, and yours will provide a touch of luxury and exceptional customer service — figure out what sets you apart, and how you'll provide a solution to an issue your potential customers are facing.

While you're at it, consider your location — location has a lot to do with where your target market will be, and how you can serve them, it's 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, which will take some research into zoning policies, and just because an area is compliant with local zoning laws doesn't mean it's a 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 close proximity? Your dispensary business plan needs to address every aspect of the location to avoid potential pitfalls.

Step 4: Research Your Audience

Eduardo Silva: Now that you've explained the solution you're 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'll 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 an experience that will keep them coming back time and time again — some examples of customer personas common to most dispensaries include medical cannabis consumers, younger cannabis consumers, seniors and older adults, and health-conscious cannabis consumers. Segmenting your customers into categories will make targeting and personalized marketing much easier, but those are just broad overviews, you'll want to delve a bit deeper into what makes your ideal customer tick — and I said "ideal customer" plural, because you'll likely have multiple customer segments to target. So maybe one of them is Mary, who's in her late 30s, has a professional job, and uses cannabis for wellness, to get better sleep, focus more, and relax — then there's Joe, who's just out of college, likes learning about what he puts into his body, is environmentally conscious, but also on a budget, he wants the high-end experience without the high-end prices. These are little stories, essentially, to help us envision who will be walking through those doors — these personas are who you'll be trying to reach and market to, and, once you understand your customers, you can get a better idea of what motivates them to spend money, what they like to spend on, what they're interested in, and how to best communicate your marketing messages to them and people like them.

Step 5: Connect With Distributors

Eduardo Silva: As a dispensary, you'll be selling products — unless you're growing or making your own, you'll need to cover how you'll be sourcing products and who you'll be sourcing from. Ideally, these are the types of products that help reaffirm your unique value proposition, products your ideal customer wants to buy — to ensure you understand what it takes to source those products and get them into your dispensary, you want to start communicating with distributors, learn about their timelines, purchasing requirements, how much everything will cost, and how and when you'll need to pay them — that last bit will tie into a later step, so keep that in your back pocket.

Step 6: Dial In Your Marketing Strategy

Eduardo Silva: In steps one through five, we talked about the market, what you'll be offering that sets you apart, and who you'll be targeting it to — now we need to talk about the how. How are you going to position yourself in the industry and actually reach your target audience? This is a big question, essentially detailing how you're going to be profitable as a business. Since you know your unique value proposition, it's time to flesh out your brand identity — a brand identity should consider what your brand says, what your brand's values are, and what you want people to feel or think when they interact with your brand. Once you've established a brand identity, you can start thinking about how to position and grow it, just remember to keep your target audience in mind as you work on this step.

So, you have your brand identity and your target audiences — next up is thinking about which strategies you want to use to communicate with them. Strategies like search engine optimization, email marketing, SMS marketing, social media marketing, and dispensary loyalty programs can help dispensaries attract new customers and build their brands, even in regions with restrictive cannabis marketing laws — then there's Google Ads, display ads, which get your message right in front of potential customers. For your plan, consider what the marketing funnel for your dispensary looks like, and where along the funnel each different strategy can work to capture and direct those leads — different goals, different customers, and different kinds of content and promotions will need to exist at each level of the funnel. Take some time to sketch out your marketing funnel, to identify where different strategies will be needed and how they can be integrated to work together toward that common goal of getting the new customer.

Once you have these components in place, it's time to discuss how you'll measure the effectiveness of your strategy — revenue attribution is key to making sure your efforts are actually paying off. How are you going to measure whether your marketing strategy is working, what metrics will you monitor, and what do those numbers need to be for you to feel you've become successful? I want to take a moment to note that, while you're putting this down on paper, it may feel concrete, but, in reality, your business plan is a living document — it can and should be changed whenever you have new information, you should look for holes in it and address them, amend it regularly so it actually reflects what's going on in real time.

Step 7: Calculate Your Financials

Eduardo Silva: The financial section of your dispensary business plan is one of the most important — why? Because you'll be using your business plan to secure financing, so the numbers matter a lot. This is the section where you do not want to be vague, or over-promise what you can deliver to investors — draft a financial plan complete with financing you already have, operating costs, revenue forecasts, budgets, projected profit and loss, cash flow statements, and break-even analysis. Don't forget to focus on cash flow, as many big companies struggle with cash flow issues, especially in the cannabis industry. Then include information regarding profitability, what type of timelines and metrics you'll use to gauge the success of your dispensary — set start and finish dates and targets for specific milestones, before and after launch, try to set achievable milestones that emphasize growth, and establish metrics to check the health of your company.

As you're doing this, make sure to take a look at the regulations for running a dispensary, and include everything you'll need to institute for compliance under your operational costs — for example, if you need to have a pharmacist on-site, make sure that's accounted for in your staffing expenses, if you need a particular type of security setup, that also needs to be in your operational costs. Consider every aspect of what it will take to run your business, so your numbers are as accurate as possible.

Step 8: Write Your Executive Summary and Mission Statement

Eduardo Silva: Now that you've 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'll be achieving, it's the place where you summarize all the key information, so the reader has a quick reference without having to search — you'll place this piece at the top of your document, right 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 you've put in the work to design a business that will succeed — and, if you're going after funding, include how much money you're seeking, how it will be used, and what you can offer investors in return. For those unfamiliar with the cannabis industry, you can include some information on the growing demand for cannabis and the industry's trajectory, but keep this concise and easy to read.

You should also need your mission statement, if you haven't already created one — your mission is your why, and your mission statement should basically share why it is that you do what you do. Do you want to help people access more natural medicine? Do you want to get great products to people for less? Are you concerned with social equity in the industry? Spell it out, and make sure the vision you share in your business plan aligns with that.

Step 9: Detail Your Team

Eduardo Silva: It's time to detail who will be taking part in your dispensary — who are the people who will make your business successful? This includes the day-to-day staff, as well as those in 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, and share an organizational chart to help make it easy to understand who will report to whom. You can add in your hiring plans, positions you'll need to fill, what type of experience and education you're looking for, how much you plan to pay employees, and how you plan on filling those positions, your recruiting strategy — very important.

Step 10: Put It All Together

Eduardo Silva: Finally, we've reached step 10, thanks for sticking with us. Now that you've done all the heavy lifting, it's time to put it all together — start with the executive summary, then your market and competitive analysis, next a description of your business and your unique value proposition, followed by your organizational information from step number nine, and your product and customer information, followed by the marketing strategy. Next you'll want to share your financials, and, lastly, you can add an appendix featuring bios on key stakeholders, more details from your market analysis, and copies of any business-related documents, like leases and licenses.

Once it's all together, review it, try to poke holes in it and see if it floats — look at it from the eyes of an investor, have you minimized risk, are you compliant, look for any challenges or opportunities and address them, until you feel confident you have a winning business plan.

Two Things Often Overlooked: Marketing Budget and "The Ask"

Eduardo Silva: There are two things that often go overlooked in a business plan. The first is the marketing budget — you have the plan, but you need to support it with an investment. When you're first starting out, your instinct may be to only put a little toward marketing, but this is the wrong approach, you need to invest in getting your business seen and noticed from the outset — this means you may need to invest more before and after you launch than you may actually have to invest later down the road. If you don't generate enough interest in your dispensary at the beginning, it's going to be harder to carve out a niche for yourself when there are more established players in the game.

The second thing that often gets overlooked is the ask. Now that you've spent all this time putting together a comprehensive plan, detailing your business and everything you're going to do to make it profitable, you have these beautiful financial statements, and then, what — investors don't know what you actually want to ask them for. If you're just looking for funding, you need to be clear about it, if you're willing to take on partners, be clear about that too — you can have a great business plan and have it fall flat at the finish line because you didn't make it clear enough that you needed funding, or people to join your board.

One more thing, about compliance — as you brainstorm your business and how everything is going to work, keep that in the back of your mind, and make sure your plan aligns with what's allowed in your state or province.

Don't Be Polaroid: Treating Your Plan as a Living Document

Eduardo Silva: So we've talked about the business plan as a living document, and sometimes it evolves over time — did you know that Polaroid actually had one of the first digital cameras in production, yet they never brought it to market, because their original business model was focused on selling film? They got so tied up in the idea that they were in the business of selling film that they almost let the entire business fail — they're still around today, but not as big as they once were, because they weren't able to pivot, they didn't have the open mindset necessary to expand or spot new opportunities. So the point here is, don't be Polaroid — if something isn't working, or if you're following industry stats and trends and start seeing new opportunities or challenges, pivot to meet them. Businesses are malleable, and they have to be — you may start off with one thing and end up as a completely different business entity, and that's completely okay, and it's better than going bankrupt like Polaroid did. Maybe you have this vision of creating a space that supports artists and does talent shows, but then discover your delivery component is much more profitable than your in-house experience — it's okay to rework your original vision, it doesn't make you a sellout, it makes you a business-savvy owner.

Special Offer

Eduardo Silva: So, we would love to help you get your dispensary off the ground — we work with thousands of dispensaries, including single-location shops and multi-state operators, and offer a variety of services tailored to our clients, all with the same goal, to help our clients succeed by connecting them with new customers. We can help you get established online, with a new website and engaging content — in fact, we're running a special deal for today's attendees only, schedule a call with me by the 19th to get a free dispensary website with a six-month digital marketing plan, or 50 percent off a website built with a three-month digital marketing plan. Your digital marketing plan will include everything you need to succeed online, including SEO, to make sure your website ranks well and gets found easily, Google Ads, to quickly get you to the top of search results, and display ads, to help you connect with new customers wherever they are, driving them to your website and storefront — this will help kickstart your dispensary and make sure you can really establish yourself online. We also offer revenue attribution and reporting, so you can see how well your digital marketing efforts are performing.

Closing Remarks

Eduardo Silva: So, schedule a call with me, and let's talk further about how we can help you build your vision and start generating revenue. I want to thank you very much for taking the time today — if you have any questions, and want to take five minutes to talk offline, once again, you have the link here to schedule a call with myself. Once again, I appreciate your time joining us today, have a wonderful rest of your day.

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