Cannabis Business Planning 101: Finding Your Big Idea
The green rush is here. With more and more areas in the US and abroad shifting their policies to allow for legal cannabis, the marijuana industry has become the fastest growing industry in the world. Still, while many want to get involved with the space and cash in on the rapidly expanding market, not everyone has found a big idea that can can stand out against the competition.
At Higher Yields Consulting, part of our work is to help cannabis entrepreneurs brainstorm big ideas that can bring even bigger returns. So we thought we’d share some of the basic steps you can use when brainstorming your own big idea.
Assess Your Expertise
When we work with clients on brainstorming business ideas, we usually start by assessing their team and the expertise they bring to the table. So to get started with your own brainstorming session, consider the backgrounds of the people on your team. What skills do they have which might transfer to the cannabis industry? If someone comes from real estate, this could be helpful for more real estate driven business models. Does your team have a background in sales? Perhaps distribution is a good fit. Come from a manufacturing background? You might do well with extraction or product manufacturing. Got a talented chef in the mix? Try doing something with edibles.
Whatever skill sets are present on your team should be the starting point for your brainstorming process. There is no point moving forward on a brilliant business idea, if your team won’t be able to actually pull it off. So make sure you design a plan that speaks to your expertise and feels like something you can make happen.
Understand Your Market
While it’s key to start with your own teams expertise, you also have to find an idea that fits into the market you are working in. Even if you craft the perfect plan for your team, if it doesn’t work well in your particular area, it’s just not the right idea. So you will also have to look at where you are at, and how to modify your plans so that they make sense in that context.
Part of this stage is looking at the cannabis services already available in your market. You want to notice if there are gaps (areas where a service or product is needed) or areas of over saturation.
For example, in Colorado there is an over saturation of cannabis cultivators, but much fewer cannabis dispensaries. In this market you can make a lot more money opening up a cannabis shop than you could trying to compete as a cultivator with a stand-alone grow facility. So if cultivation is your team’s skill set, but your in Colorado, a market that is over saturated with cultivators, you’ll need a good plan. You might consider a plan that includes vertical integration so you can cash in on your growing skills by selling your cannabis through your own storefront. These market factors can be the difference between success and failure, so you should always take them into account when you are brainstorming your big idea.
Calibrate Your Financials
Finally, it’s important that your idea has the financials to support it. It’s great to dream big, but you need to have a realistic plan for reaching those big goals. If you know you have a certain budget, make sure that your plans are achievable within that budget. If you are courting investors as part of the process, you’ll need to have a strong business plan with a financial strategy that shows you understand what it will take to make your idea happen, and how much return your investors can expect to get back. Your numbers need to make sense with your plan and show that the business can be profitable. This will not only put investors at ease and increase the likelihood that they will want to invest, it will also ensure that your plan has it’s best chance at success. All in all, it will save you a world of heartache and stress later down the line.
If all this sounds like a big project, it certainly can be. Planning a successful new business isn’t a simple task. After all, 90% of new startups fail. That’s why getting advice and insight from expert consultants can be a big help. From brainstorming, to sharing insider knowledge about the different cannabis markets, to assisting with the complicated financial planning, our consultants have a lot of experience with this part of the process. Feel free to contact us for help or advice on finding your big idea.
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