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How to Write an Effective Dispensary Business Plan

Introduction

Business plan, no doubt, is the defining document you will ever create for your marijuana dispensary business.

There are lots of enthusiasts out there who want to get in the action and start their own dispensaries.

What to do first?

If you don’t know much about the laws and regulations governing marijuana usage in your state of residence, it would do you good to check out the official website of the Health Department belonging to your state government.

You can ask any of your questions to their representatives and get all the answers you need.

This is the best way of getting to know the laws and regulations of your particular state, especially because marijuana laws keep changing regularly across the country and it’s not possible for us to keep up with these laws every now and then.

That said, there are some things that hardly ever change, and drawing a good business plan is surely one of them.

To begin with, to state the importance of putting in place a great business plan, it would

be essential to let you know that without a good business plan, your dispensary license

will never be granted.

The Importance of a Sound Dispensary Business Plan

The very first thing one has to keep in mind while even thinking of starting a marijuana dispensary business (or any business for that matter!) is the future.

Any successful business person will tell you how important it is to stay a step ahead of the clock.

You need to know the trends on your niche.

You need to be able to forestall future losses or even better, build profits from good speculation of market trends.

Thus, having a good idea of your market, your customers, your competitors, and your supervisors, are the underlying stepping stone to the success of your dispensary business.

And where does one get all these information?

Market research is the only way you can learn about the little secrets of your market and customer base.

To let your investors and official licensors know that you are serious endeavour, you need to put this knowledge across successfully.

You need to be able to drive home the point that you are not a casual sheep in the herd, but you are serious businessman and you can run your marijuana dispensary with responsibility and care while abiding by all the applicable

laws, rules and stipulations, set by the state as well as federal government.

Why the need for a good business plan?

Your marijuana dispensary business, just like any other business, won’t find investors or licensing officials unless you convince them through a good business plan.

As much as important it is to know what you need in order to come up with a perfect dispensary business plan, it’s equally important to know where one can go wrong while drawing up a business plan.

That is why we thought that we should summarize the points for you.

Mistakes Dispensary Enthusiasts Often Make

Hasty models Many marijuana dispensary enthusiasts draw up

business plans without devoting enough time for idea or research.

This often result into a “half-cooked” plan which is no good for anyone.

Thus, it is a rule of thumb that weeks, sometimes months, need to be devoted to carry out research and brainstorm ideas for your dispensary business plan to be a success.

Lack of understanding of market Many people who apply for marijuana dispensary

licenses show very little understanding of the business and the market.

Very few of those actually understand the gravity and sensitivity of this business.

Medical marijuana dispensaries need to be and must be run in highly professional manners, just like any other pharmacy or even hospitals.

This lack of understanding is often visible through the business plans drawn out by such dilettantes.

So, before you even begin to start writing your marijuana dispensary business plan, take some time to research the market and also how you touch lives of patients who seek palliative care through medical marijuana.

This is a noble endeavour and should be treated like one.

Unconvincing use of language.

While writing a business plan, the language used has to be persuasive and confident.

Many people don’t heed this fact and the resultant business plan, however sound in technique, ends up reading like an essay.

Hence, the use of language in your business has to be confident, convincing and should reflect the fact that you have put in lots of hours for market research and business understanding.

Experienced investors or officials can easily tell apart a good plan from a bad one, so it’s always good to be on the safer side.

In summary?

So, in essence, you need to devote time, efforts, energy, and even your own money to carry out solid research before writing a dispensary business plan.

This investment of time and money will definitely not go in vain, as this will come in extremely handy when you actually begin to run the business.

Nobody can put value on knowledge, and good business plans underline that sentiment.

What should the structure of my dispensary business plan be?

There is no definitive structure of an ideal business plan.

People generally tweak and turn things around to suit their needs.

That said, there is certain skeleton model that is normally considered to be standard.

It is supposed to cover every major aspect of your marijuana dispensary business down the stream.

This standard structure is described in this presentation.

Business Plan Structure

The following structure is often followed by the best business plans: “Confidentiality Agreement”

Table of Contents Executive Summary Business Summary

Start Up Summary Products and Services Market Analysis Summary Strategy and Execution Summary

Sales Forecast Milestones

Management Summary Financial Plan

Start up Funding Projected Profit and Loss

References Notes

Confidentiality Agreement

At the start (and preferably at the close too) of every business plan, no matter what the business is, there is a confidentiality agreement located.

A confidentiality agreement is a piece of semi-legal agreement that legally binds the potential reader of your dispensary business plan not to disclose, reveal, copy, or disperse or use ANY information, business strategies, trade secrets or facts ad figures central to your business idea.

This is particularly important as your business plan is your own intellectual property and there has to be in place proper protection to pre-empt the use of your property in unpermitted ways.

A typical marijuana dispensary business plan confidentiality agreement maid body reads as follows:

Example of the Main Body of a Confidentiality Agreement

The reader/readers of this plan agree/agrees not to disclose any information contained within this business plan, without the proper written consent of _______, _______ and ________.

The said information is deemed sensitive and important for the mentioned business and hence this business plan be returned immediately to the undersigned owners of this business plan.

Signatures Date Place

Table of Contents

The name says it all. A proper table of contents is necessary for easy navigation through your

business plan.

Executive Summary

Executive summary of a business plan, often decided by many people as management-speak, is of importance as a reader gets to take glimpse of what’s contained inside your marijuana dispensary plan by just reading at some points.

This means that if you want to pursue your reader to go and read the plan right to the last page, you MUST have a great executive summary.

So, what exactly should one write under the head executive summary?

Well, to put it very simply, business plan executive summary should contain the essence of what’s to come.

The gist of your business idea and structure explained neatly, in no-uncertain terms and more importantly, in short, should be the nature of content under executive summary.

Business Summary

This is where the actual body of your business plan will start,

This would ideally start with how and why you wanted to get started with the marijuana dispensary business idea.

This should include an honest, but also an ideal, answer of what you exactly want to achieve by entering this business field, other than merely driving profits.

Many modern investors look for a little social facet to invest in.

For example, an encouraging association with a promising local charity would provide for a great business value, not to mention the social service you would be able to achieve through this tie up.

Such little points, that only increase the transparency of your business but also help you contribute to much larger goals in whatever capacity are often overlooked by start-ups and many investors, especially in this day and age, definitely prefer a start-up that’s socially aware along with making a successful business.

The business summary should have the details about the following contents:

The name of the companyBusiness inception ideaThe name of the owners/partners/associatesThe proposed location of the headquarters of

the businessThe proposed locations for the potential

branches/expansion themesThe supposed area of operation (important for

legal reasons)The proposed business structure

The sub-header mentions start-up summary.

The start-up summary, at it’s core, is a listing of all the assets, investments, revenue streams (if any), and debts of your start-up business.

Most commonly this would include money you have put up yourself by the date of the submission of the dispensary business plan.

A typical start up summary table may look like this:

Startup Expenses ($)

Expense Stream 1

Expense Stream 2

Expense Stream 3

Total Start-up Expenses

Start Up AssetsAsset 1Asset 2Asset 3Total Start Up Assets

TOTAL REQUIREMENTS (Including the Total Start Up Expenses)

Products and Services

A methodical list of ALL of your products and services is to be provided under the heading “Products and Services.”

This list should be exhaustive and comprehensive and should leave no product or service unaccounted for.

The content under “Products and Services” should contain the following points:

All the products along with unit pricesAll the services along with unit pricesCustomer centric product variationsRegional product variations (if any)Membership services (if any)Exclusive servicesMiscellaneous

Market Analysis Summary

As mentioned countless of times earlier, a lot of market research should be at your disposal before you even begin to write your marijuana dispensary business plan.

Every business plan that puts in significant resources (time, money and efforts) to carry out extensive market analysis has a head start over many others who don’t.

The underlying principles of sales is that you have to be aware who your customers are.

You have to be able to target the section of population that make up your customer base.

Having identified this section of society, you will be able to better understand their changing needs, changing expectations and feedback.

That’s precisely why, a lot of research would go into writing this particular section of your marijuana dispensary business plan.

In the section ‘Market Analysis Summary’, you should be able to answer the following question satisfactorily in order to convince the readers (investors/officials) that you are a responsible and committed business person.

Who is your recurring customer?

Here, you should be able to identify the bulk of your customer base.

This group of customers will ideally be recurring customers with frequent needs for your products and services.

These are the customers you don’t want to lose out on because these customers will contribute the most to your sales in the long run.

A proper demographic analysis that identifies targets and explains the concerned customer

base from the given population is important to decide the further plan of action of your

dispensary business.

Who are your local and off-base competitors?

Another important part of market analysis involves the identification of your existing as well as potential customers.

As a marijuana dispensary owner, you can expect to face good competition in your area of operation from the local as well as off-base (online) competitors.

Having identified your competitors, you can estimate the percentage of market share you are likely to get to yourself.

This will help in taking a close look at that section of the market that actually yours for

the taking, instead of wasting resources on the market share that’s already been taken up by

existing competitors.

What plans do you have in mind for the next five years?

You will have to come up with well thought out plans for expansion and growth of your dispensary business for the near future, typically for the next five years.

This will determine what path you want to go down as a dispensary owner.

The prior assessments of demographics will certainly influence this answer.

A typical market analysis summary can look like this:

Year 1 Year 2

Year 3

Year 4

Year 5

Potential Customers

Growth

Sample size

Region 1

Region 2

Region 3

Region 4

Region 5

Total

Strategy and Execution Summary

In this part of your dispensary business plan, focus will be shifted on the ideas again.

You need to chalk out detailed analysis of strategies that you might have in pushing the sales further down the line.

This would involve marketing, promotions, advertising, executing pre set strategies to perfection.

The point of this is to give the reader an insight into how you are planning to continually improve the performance of your company by staying up to date with the changing needs of the market and your niche.

There are a number of factors that can be incorporated into strategy and execution methods.

The most important of these will be how you are going to push your services and productions into the target market and how you plan to stay ahead of the competition.

This means a detailed analysis of marketing exercises and promotional events.

The mode of marketing will vary from one businessman to the other, and so keeping it simple, it will suffice to say that your strategies for increasing profits through increased sales will all go down in this part of the business proposal that you plan to write.

Sales Forecast

With a detailed research of the market, competition and target customer base at your disposal, you can draw out good marketing strategies.

With good marketing strategies, you can safely predict future sales in the nearby future (ideally 3-5 years).

While forecasting your sales, it is important to keep the moderation of the numbers.

It’s generally advisable not to be too easy on yourself, while it’s important not to sound too bashful of the future sales.

A right balance in forecasting sales can give you and your readers a fair idea about the money making potential of your dispensary business.

Milestones

In management of a business, milestones play a huge role.

Milestones are nothing but a measurable, a directly palpable result that can ensure that the things are moving in the right direction.

While operating the business, things need to be kept simple and short term goals often achieve that effect to a good degree.

Reaching a milestone is a testament to the fact of the normalcy of operations.

Milestones can be both financial and strategic.

Milestones can be monitored easily by setting up a quarterly or bi-quarterly basis for the assessment.

Many businesses often offer added incentives for the managers of various sections of the business to reach the milestones prior to the deadline, without compromising on the quality of the work completed.

For example, in your marijuana dispensary business, you can set up a short term milestone of two months for achieving a particular sales figure.

Milestones often motivate the employees and favourable results can be achieved through this medium.

Management Summary

The management summary of your business plan will lay out the structure of your marijuana dispensary business.

Choosing the most suitable business structure is very important.

Management summary will describe at length the hierarchy structure of your business.

This will determine the number of employees you have or need to have in order to run efficiently and profitably.

This will also help you determine if there are any management lapses that need to be taken care of, in terms of employee numbers or managerial positions.

Financial Plan

All the previous sections of the business plan are ultimately aimed at the attractiveness of this section.

The financial plan of your business will tell the investors/officials whether you have a solid business or business idea in going forward.

The current stream of revenue and/or assets as well as the current stream of expenditures or losses will decide if the business is financially profitable or not.

Start-up Funding This will include the initial injection of funds you

might have received from other investors/banks. Often mistaken for capital, this is a recurring stream

of investment, rather than the zero-revenue capital.

Projected profits and losses This will carry the numbers for projected profits and

losses for the next few (typically 3) financial years. It is a general practice to mention the projected

profits and losses prior to taxes, depreciation, amortization and interests.

Conclusion

In conclusion, it can be clearly observed that a lot goes into the making of a marijuana dispensary business plan.

So, hasty preparations of business plans must be avoided at all costs in order not to end up with a discouraging business plan that no investors will be keen to look twice at.

However, if you follow the guidelines mentioned above, your marijuana dispensary business plan will have a solid foundation and it will be attractive for the investors as well as the officials.