Answering Client FAQs: Should I be working on a business plan?
What is included in a business plan?
A business plan is a great way to get your ideas onto paper to determine what defines your business and to get an idea of what the costs are going to be.
Key components usually include an executive summary, products/services the business offers, market analysis, marketing strategy, and financial plans/projections. (Note: there may be other items included in your business plan, but the list above includes items that should not be overlooked).
The executive summary should include a snapshot of what the business concept is, the competitive advantage, and a (favorable) financial projection. The executive summary should be short and compelling to make the reader want to finish reading your plan.
The products or services section should be just that, explaining what your business will offer. That leads into the market analysis, which includes the competitors to your business, who your target audience is, and how those factors interact with your business.
The marketing strategy section should include how you intend to attract and keep customers. This should include the mechanism in which your business will get its product/service to the customers.
The financial plans/projections section is one section investors will surely spend a plethora of time viewing. This section should be realistic but favorable. A part of making this section realistic is that your business will likely not turn a profit in the first year (or maybe even the first two years). However, it is not all doom and gloom for your business, that is why you are drafting a business plan, to be prepared to create a successful concept.
Another tip when drafting this section is to think of any expense that the business could incur. When thinking of expenses, it is better to overstate expenses for unknown items. This will also allow you to research the costs of items such as equipment necessary for your business.
A business plan can be tricky and will take some time to get a final draft completed. It may raise new questions about what your business will need to succeed and compete. That is part of the value of it!
Why are business plans important?
In addition to helping founders think carefully about their business, a polished business plan is crucial for a business to obtain funding or attract investors. When investors are deciding whether to invest in your business, they will want to see your business plan. If investors are looking at your business plan it is crucial that your business plan is polished and ready to entice the investors to invest in the concept. As mentioned previously, investors will want to see the financial projections. Because the investors will spend some time on this section, it should be realistic and not illustrate astronomical growth.
Even if your business does not need funding, a business plan can keep a business and its owner(s) on track with their original goals. Alternatively, the owner(s) will be able to see why it may be a good reason to deviate from the original plan. Further, you can use the business plan to track your progress on your financial goals. The business plan should be a living document so that it grows and adapts to your business. As the business grows, the business plan can be checked to measure the progress of the short-term and long-term goals of the business.
Minnesota cannabis businesses have an additional reason to focus on their business plan: licensing. Even though licensing applications seem far into the future, it will approach quickly. A well-thought-out business plan will be a key part of the licensing application for Minnesota cannabis businesses. It's also a piece that you can start now, so it is one less thing to worry about come licensing. As mentioned previously, creating a business plan will help put ideas to paper and help you understand the costs of what it will take to open a Minnesota cannabis business.
In response to questions like these, North Star Cannabis Law is proud to launch our Business Plan Review Service! You'll get resources and samples of real business plans, as well as feedback and suggestions on your draft.
Contact us to get help!