Commercial Cultivation Business Plan Template
Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their business. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a commercial cultivation business plan template step-by-step so you can create your plan today.
What is a Commercial Cultivation Business Plan?
A business plan provides a snapshot of your commercial cultivation operation as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan for Commercial Cultivation
If you’re looking to start a commercial cultivation operation, or grow your existing commercial cultivation operation, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your commercial cultivation operation in order to improve your chances of success. Your commercial cultivation business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Commercial Cultivation Businesses
With regards to funding, the main sources of funding for a commercial cultivation operation are personal savings, credit cards, and angel investors.
One of the most common forms of funding for a commercial cultivation operation is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or they will give you a loan. Venture capitalists will not fund a commercial cultivation operation. They might consider funding a commercial cultivation company with multiple locations, but never an individual location. This is because most venture capitalists are looking for millions of dollars in return when they make an investment, and an individual location is not likely to achieve such results.
Commercial Cultivation Business Plan Template
Your business plan should include 10 sections as follows:
Executive Summary
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of commercial cultivation operation you have and the status; for example, are you a startup, do you have an existing commercial cultivation operation that you would like to grow, or are you operating a network of commercial cultivation operations?
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the commercial cultivation industry. Discuss the type of commercial cultivation you have. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.
Company Analysis
In your company analysis, you will detail the type of commercial cultivation operation you are running.
For example, you might operate one of the following types:
- Indoor: this type of operation is contained in one or more warehouses, so that the growing environment can be controlled, and the operation can run year-round
- Outdoor: this type of cultivation is subject to more seasonality, but is more environmentally friendly and has a lower cost of operation
In addition to explaining the type of commercial cultivation operation you have, the Company Analysis section of your business plan needs to provide background on the business.
Include answers to question such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include sales goals you’ve reached, plantation acreage, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
Industry Analysis
In your industry analysis, you need to provide an overview of the commercial cultivation industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the commercial cultivation industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your strategy particularly if your research identifies market trends.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your commercial cultivation business plan:
- How big is the commercial cultivation industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your cannabis? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
Customer Analysis
The customer analysis section of your commercial cultivation business plan must detail the customers you serve and/or expect to serve.
These are examples of customers segments: Manufacturers, dispensaries, other cultivators, etc.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of commercial cultivation operation you have. Clearly, manufacturers would want different services, and would respond to different marketing tactics than dispensaries.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, if you are targeting end consumers, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most commercial cultivation operations primarily serve customers living in their same region, such demographic information is easy to find on government websites.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
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Competitive Analysis
Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other commercial cultivation operations.
Indirect competitors are other options customers may use that aren’t direct competitors. This includes pharmaceutical companies, and vertically integrated operations. You need to mention such competition to show you understand that not all fiber or supplement demand will be fulfilled by hemp.
With regards to direct competition, you want to detail the other commercial cultivation operations with which you compete. Most likely, your direct competitors will be commercial cultivation operations located very close to your location.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- What strains do they cultivate?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide superior products?
- Will you provide products or services that your competitors don’t offer?
- Will you make it easier or faster for customers to purchase your products?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Marketing Plan
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a commercial cultivation business plan, your marketing plan should include the following:
Product: in the product section you should reiterate the type of commercial cultivation operation that you documented in your Company Analysis. Then, detail the specific services you will be offering.
Price: Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the products and services you offer and their prices.
Place: Place refers to the location of your commercial cultivation operation. Document your location and mention how the location will impact your success. For example, is your commercial cultivation operation in a central location that will make transportation easier, or in a location where the terroir is well-suited to a particular strain, etc. Discuss how your location might allow you to serve a greater volume of customers.
Promotions: the final part of your commercial cultivation marketing plan is the promotions section. Here you will document how you will drive customers to your business. The following are some promotional methods you might consider:
- Advertising in trade magazines
- Attending trade shows
- Social media marketing
- Email marketing
Operations Plan
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your commercial cultivation operation, such as tilling, planting, growing, harvesting, and curing the crop, maintaining equipment, staying abreast of new technology and/or regulatory developments, processing paperwork, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to sign your 25th supplier contract, or when you hope to reach $X in sales. It could also be when you expect to purchase additional acreage, or when you expect to launch a new location.
Management Team
To demonstrate your commercial cultivation operation’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally you and/or your team members have direct experience in cannabis cultivation. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in cannabis and/or successfully running small businesses.
Financial Plan
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.
Income Statement: an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you supply 5 manufacturers or 25? Or will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets: Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $250,000 on building out your commercial cultivation operation, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $250,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement: Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a manufacturer approached you with a $500,000 contract for flower, that would cost you $350,000 to fulfill. Well, in most cases, you would have to pay that $350,000 now for inputs such as seed and soil amendments, employee salaries, equipment, etc. But let’s say the company didn’t pay you for 180 days. During that 180-day period, you could run out of money.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a commercial cultivation business:
- Location build-out including land preparation fees, construction of greenhouses and production facilities, etc.
- Cost of equipment
- Payroll or salaries paid to staff
- Business and liability insurance
- Taxes and permits
- Legal expenses
Appendix
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your commercial cultivation design blueprint or location lease.
Summary
Putting together a business plan for your commercial cultivation company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the commercial cultivation industry, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful commercial cultivation.
Finish Your Commercial Cultivation Business Plan in 1 Day!
Don’t you wish there was a faster, easier way to finish your Commercial Cultivation business plan?
With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!
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