fbpx

Understanding How to Write a CBD Business Plan

By Wired Messenger CBD Marketing


A Basic CBD Business Plan Template

The CBD (Cannabidiol) industry is seeing online start-up companies, dispensary style storefronts, and many other business structures appear.

We are starting to see fantastic cash flow in a number of these situations. In many others, though, poor planning turned what could have been profitable ventures into disasters.

While the number of businesses selling CBD oil and other CBD products is growing at an incredible rate, many of these companies do not have a solid structure from which to operate from.

The key to a profitable business is great foundations, and that starts with a business plan.

What is a Business Plan

It doesn’t matter if you are selling pet food or running a cannabis business; you need to have a financial, operational, and marketing plan set before you even think of risking your assets.

A business plan allows you and your possible investors to see exactly how and why your business is expected to profit. A good business plan will detail the products, market opportunities, and a whole lot of other pertinent information we are about to delve into.

Simply put, a business plan is just that, the overall planning of your business in a format that others can readily understand.

How is a CBD Business Plan Different?

A CBD business plan will not be much different than a business plan for any other related retail, health, or e-commerce company.

The unique aspects of the CBD industry will come into play more in the sections of the business plan that cover the market, competitors and opportunities. In these sections, understanding and knowledge of the current state of the CBD market will be key.

A Basic CBD Business Plan Template

We will cover each of the major sections of your business plan and what you need to include in that section. What you include in your business plan will depend on exactly what type of business you will be running, how you will be selling your products, etc. In this article, we will work from the United States Small Business Administration table of contents:

1. Executive Summary
2. Business Description
3. Products and Services
4. Marketing Plan
5. Competitor Analysis
6. SWOT Analysis
7. Operations: Management and Organization
8. Financial Plan: Startup Expenses and Capitalization
9. Appendices

We are going to briefly explain each section and what you should include for that section.

While this may seem like a lot, there are really four main aspects to a business plan – opportunity, execution, company overview, and financial plan. This layout is just a common way to address these concerns in an easy to digest fashion.

1. Executive Summary

Learning how to write a good executive summary can be a lot to take in, but really it is simply an overall outline of the business, product, target market, strategy, and competition. The summary should also include necessary information about your leadership structure, management team, location, and financial information.

You don’t want the summary to go longer than two-pages, but make sure you keep it well written and include all pertinent information. Investors will carefully review your executive summary.

You may also want to include relevant information about the CBD industry in case investors are unaware of it.

Major points to hit

A high-quality executive summary will try and cover these major points:

  • Business information and concept: Who you are, business name, location, contact information. 
  • Business opportunity: The problem you are solving. Explain why there is a need for the service your business will be offering, and how will you “solve this problem.” Emphasis on why you should have a competitive edge. Any future or current legalization issues can be mentioned.
  • Target market: Who is your ideal buyer? Be as specific as possible and add any quantifiable evidence (market research for example).
  • Business model: Talk about the products and services, and how you plan to go about selling them. Basically, your marketing and sales strategy.
  • Competition: Describe anyone else who offers competitive services. Talk about why you will have an advantage. Carefully look at their strengths and weaknesses.
  • Financial analysis: Summarize your financial plan, including requirements (capital to start and/or expand) and how the required capital will be utilized. Projected sales, liabilities, cash flows, gross margins, net profit and any metrics used to estimate the data.
  • Staff and management: Explain the actual structure of operations in the company – the legal form of operation, key personnel, etc.

2. Business Description

This section should begin with a quick overview of the industry and the current outlook of that market. Explain future developments and add footnotes to justify your claims.

After a quick primer on the CBD industry, begin to explain your company’s goals and objectives in measurable terms. Talk about what you can reasonably expect to accomplish, any possible sales forecasts, and timeline estimations. The organizational timeline, when you need to secure funding when you can be in full production, etc. should also be included.

You will then need to talk about the planned structure of your company. This includes the type of operation (manufacturing, retail, etc.) and whether there are already any established locations (or websites).

Get into a bit of detail on the ownership structure, such as whether or not it is a sole proprietorship and how employees will be managed and the products distributed. How will decisions be made? Are there silent partners?

Include any substantial assets or leases owned by the company too to give investors a clear picture.

3. Products and Services

The products and services section of your business plan outlines what you will be selling. Whether it’s tinctures, edibles or CBD oil to vape, talk about the main product and what it does. Explain why your market needs it and how it will compete with similar items already on the market. What differentiates it? Go into pricing and why this pricing was chosen.

If you plan to sell products in the future explain what those new products will or could be; items that can be sold as additions, or souvenirs or accessories for example.

This is also where you should explain any trademarks or intellectual property you have relevant to your business.

Try and be specific as possible why your quality product is fitting a need in the market and how they will be different or better than what is currently being offered.

4. Execution and Marketing Plan

Your business plan’s execution aspect will get into the nitty-gritty of taking the opportunity and turning it into profit. This area will go into your marketing and sales plans, any market analysis you have done, and the overall marketing strategy you will undertake.

You will talk about how your CBD company plans to reach its customers and who your buyers are. Make a detailed profile of your example customer. Figure out who your buyers are, why they buy, as well as where and when they buy.

If you are angling at health or sports fitness aspects of the CBD market, maybe you will meet on social media influencers you will leverage. How are your advertisements designed to reach your target market? What is your advertising budget?

In this area is where you are also going to put your positioning statement. This is where you fit into the market. Are you a low-cost business, a premium service? What are you offering that is different from your competitors in the cost/value side of things?

5. Competitor Analysis

The competitor analysis is simply your research into competing businesses in the industry, how they are run, and how they are currently positioned with their services. Talk about who they are, how well established they are, and what their profit margins are.

Are some controlling a certain niche? Are they overlooking a market segment? Go into as much detail as is reasonable regarding the strategies, successes, and shortcomings of your possible competition.

6. SWOT Analysis

The SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) is a way to undertake a comprehensive view of the industry.  This is a planning method used to summarize issues in a strategic focus quickly.

Strengths

Talk about any unique aspects of your products, whether you can have competitive pricing, intellectual rights, etc. This is where you reiterate why you think your model can succeed in the current climate.

Weaknessess

Talk about potential threats and issues. Are you inexperienced in the market? Will it be difficult to get attention or have competitive prices? Make sure to include how you can correct or resolve these issues.

Opportunities

How will you profit? Is demand likely to increase? With CBD and so many law changes and medical studies being conducted, there are quite a few possible future options for you to explore here. Talk about how these opportunities can best be exploited.

Threats

The opposite of opportunities, but also just as relevant to CBD. Is the product at risk of being banned? Maybe new taxes are soon to come? Will demand decrease for some reason. Talk about how you will adjust to these possible threats.

While it may seem strange to talk about potential pitfalls with investors, they will likely be aware of these issues before investing in a business in such an industry. 

Part of this is a demonstration of your knowledge and plans regarding the CBD industry. The same logic applies to the cannabis industry or any other young industry and facing a tumultuous market.

7. Operations: Management and Organization

 

This is where you will put your operations plan. Begin to explain your planned organizational structure and the logic behind it. Talk about the day-to-day operations and the overall production process. Are you receiving the goods, picking them up, repackaging, etc.

Go into a moderate amount of detail on what a typical workday may look like.

Descriptions of any relevant facilities or sites should also be included, especially if necessary renovations or updates are needed.

You will also need to talk about staffing requirements, talk about hiring needs and practices as well as manager selection and operations.

If necessary, sourcing and order fulfillment processes should at least be covered in a cursory fashion. If you have a complicated sourcing system or are getting hemp plants or other products from overseas, investors will want to know more about how this is working.

8. Financial Plan: Startup Expenses and Capitalization

 

This is the balance sheet of your business plan. Talk about operating expenses and any cash flow statements. A summary of capital requirements, how long repayments are planned to take, and what interest rates are.

Take a full stock of expenses including marketing, storage, utilities, registration fees, etc.

Try and get as clear as possible exactly how much capital you need, why, and where it will be going. If your business is already operational, then the current finances will need to be explained as well. Investors are also likely to see a clear and reasonable plan for repayments.

9. Appendices

 

If you needed to provide any charts, sourced materials, or other supplementary data, it could be included in the business plan’s appendix.

This is simply a place to put the data and materials that prove the arguments you have made throughout the document. This can also include marketing studies or photographs of your product if you think they will be of help.

For business owners looking to sell in the CBD industry, the plan isn’t going to look much different on the outside from a cannabis business plan based on cannabis plant cultivation, or a plan around selling homemade earrings. They are all cost/expense/analysis reports. The focus is on solving a problem, how to solve it, and how you will financially benefit.

Organizations like the U.S. Small Business Administration can also help you to better understand and examine what to put in each of these sections.

 

  • Share: