It seems like every day there’s a new story about a cannabis company securing a significant investment or being acquired at a significant valuation. Unless you’ve been hiding under a rock, the “green rush” is in full effect. The country wide legalization of cannabis by our northern neighbors (Canada, eh!), combined with the potential that the STATES Act will be a top priority now that the U.S. House of Representatives flipped back to the Democrats, has many investors feeling quite bullish (perhaps a little too much so) about the cannabis industry going into 2019. If you own a cannabis business or are planning to start one, the recent flurry of investments and acquisitions may have you believing that there’s a ton of money out there just waiting to fill your coffers. Au contraire, except for some of the biggest players with licenses covering seed-to-sale, small cannabis operators are still finding it difficult to secure investment capital.
Small cannabis operators and those still in the start-up phase have to work twice as hard as some of the bigger players to survive in California’s cannabis industry: The costs of real estate, licensing, and compliance are significant financial burdens for the little guy. You might have a great product or idea but not enough capital to get your product to market, so you’ve got to raise funds. Initially, you might reach out to friends and family for a loan but that will most likely not be enough to get you started. Friends and family know you, so you might not have to put in significant work for your pitch but that won’t be the case with savvy investors – they’ll want to see your business plan.
The thought of putting together a business plan might seem like a daunting task at first. Perhaps you don’t feel confident because you didn’t go to business school or you feel that you don’t have the right pedigree. Don’t do that to yourself, that’s hogwash. All you need is patience, determination, and a good understanding of your business. Here are just a couple of pointers to get you started:
State your company’s objectives.
Describe your product(s) and services.
Identify your market and tell investors why your company will succeed in it.
Describe the growth of the company and its market.
Give a detailed explanation of your funding requirements and how the funds will be used.
Tell them about you and your team and what motivates you.
How is your product or service different? Will you be competing based on price or based on other features?
What is your marketing and advertising strategy?
Show that you’ve done research on your competition.
These are just a few examples of what investors would like to see in a well-thought-out business plan. As I said earlier you don’t need a degree from an Ivy League business school to put your business plan together but it’s not something that you can just spit out during an all-night session either. Don’t lose sight of the fact that you’re asking people for money and a good business plan will go a long way in letting them know that their investment is in good hands.