Like most other businesses and entrepreneurial ventures, one of the first steps when starting a marijuana microbusiness is to create a business plan. Michigan microbusinesses are required to submit a business plan when applying for their microbusiness license.
Business plans can vary, depending on their purpose and the audience reading them. All business plans should have common factors that set forth the company’s intended purpose, goals, and future path to growth and sustainability. Michigan marijuana microbusiness applicants will also need to incorporate additional detailed plans within their overall business plan. These include a social equity plan, staffing plan, and security plan.
To begin any business plan, look to first summarize the industry that the business will operate in. Marijuana microbusiness business plans should include a background on the history of the marijuana industry and its evolvement in Michigan. When the business plan will be reviewed by others who are not familiar with the industry’s history, additional information should be included in order to best describe it in full scope.
What to include in a marijuana microbusiness plan
Common business plan components for all businesses include an overview of the intended company’s mission, vision and goals.
A marijuana microbusiness’s mission statement should be clear, concise, and provide answers to the questions “why are you starting this business?” and “what is the purpose of the business?”
What is the business’s outlook for achieving its purpose? What paths will it take to do so? What principles are important to the business’s operations? Answering these questions can help a marijuana microbusiness develop its vision statements.
Finally, a marijuana microbusiness should incorporate into its business plan goal statements. What does the company want to achieve? What are its measurements of success?
Goals are not limited to financial achievements. Goals can be related to community impact, job creation, innovation, environmental sustainability and many other measures that are important to why the marijuana microbusiness was created.
Revenue model, cost forecast and budget
Marijuana microbusiness business plans should include financial revenue models, cost forecasts and budgets for buildouts and other cash flow needs. In fact, microbusiness applicants for a license in Michigan need to submit a revenue projection as part of the application requirements for approval. Even without this requirement, thoroughly researched and reasonably estimated financial forecasts and budgets are necessary to ensure the business operations are successful.
A microbusiness must know what it will cost to purchase and build out a facility, buy or lease equipment, hire and maintain employees, implement its marketing plan, remain compliant with accounting and banking regulations, and many other cost factors aside from just growing and producing its inventory.
On the other hand, marijuana microbusinesses also need to plan revenue targets and strategies to cover their costs. A business’s long-term success will depend on its ability to generate additional cash flow and profits in line with the business owner’s goals and other company initiatives.
Finally, a marijuana microbusiness would also be wise to incorporate income tax projections into the financial model. Because of the federal restrictions on marijuana businesses, not all costs of operations can be deducted for tax purposes. This results in additional tax burden compared to non-marijuana businesses. Check out our article here about how 280E impacts marijuana microbusinesses.
Well thought out, researched and accurately calculated financial forecasts and budgets for both revenues and expected costs should be incorporated into the business plan. Marijuana microbusinesses will not only need to consider the above details, but should also include information on managing their inventory in order to achieve the expected results, as well as any limitations in financial estimates.
Competition analysis, marketing strategy, and public communication
A marijuana microbusiness plan should include details about the market the business will be operating in, and an overview of how the business will position itself successfully with its advertising, branding and public communications.
In Michigan, depending on the city or municipality the microbusiness will operate it, the local market conditions can be much different than the averages state wide or nationally. Marijuana microbusinesses should seek to understand the local market environment well. What makes your business unique? Is there a large customer base who is favorable to consuming marijuana? What prices can the local market support? What competition will your microbusiness encounter? How can any barriers be addressed?
Marijuana microbusinesses also need to plan for their ongoing marketing and advertising strategies. Many marijuana businesses entering the industry may be surprised how much marketing efforts cost. From attending or sponsoring events, online advertising, “giveaway swag”, running advertisements in print or social media, along with many other avenues, can quickly become quite costly for a small business. Having a plan in place to address these strategies and concerns is well worth it!
A marijuana microbusiness may also need to manage its public relations and community involvement. Strategies for doing so should also be incorporated into the business’s marketing and communications plan.
Marijuana microbusinesses, along with all adult use marijuana businesses in Michigan must incorporate a social equity plan into their business plan. How will your marijuana microbusiness positively impact its surrounding community, as well as those communities that have been selected as social equity locations? How will your business communicate and make available its social equity initiatives to the public?
Staffing, payroll and HR management
Everyone wants to work in the marijuana industry, so it should be no problem finding the right employees – right? Wrong.
A marijuana microbusiness will need staffing to support a fully integrated, closed looped business model. Individuals skilled in cultivation, processing, retail, and management will be needed. Depending on the goals of the microbusiness, several or more employees may be needed to efficiently run the business’s operations. Some staffing needs may be full time and others may be part time, and require different experiences among each individual. Appropriate and competitive compensation packages, employee benefits, insurance, and many other factors must be considered in forming a staffing plan. In addition, depending on its competitive market environment, a microbusiness may also need to consider its access to available staffing options.
Staffing will also require a payroll processing aspect, monthly and quarterly tax filings, and overall HR compliance management. What labor laws is your business required to follow? Will your bank accept payroll processing and payments? How will you ensure payroll withholdings are prepared and submitted timely? What workers compensation insurance is needed? What about employee benefits?
A marijuana microbusiness business plan should include an overview of staffing requirements and how the business will address its human resource needs.
Regulatory and municipal compliance
A marijuana microbusiness, along with all other marijuana businesses, must operate under specific regulations, municipal ordinances, and overall heightened compliance environment. In Michigan, marijuana businesses operate under strict regulatory requirements that largely focus on consumer and business safety and transparency. What is the business’s plan for ensuring that regulations are consistently followed?
The Michigan Marijuana Regulatory Agency frequently updates and clarifies rules and procedures marijuana businesses must operate within. These can include anything from product testing standards and financial record inspections to inventory management and building safety compliance. How will your business ensure it stays informed of all existing and future regulatory compliance requirements, both at the state and municipal level?
Marijuana microbusinesses must also incorporate fire safety and security plans into their overall plan in order to comply with regulatory requirements for facility compliance.
We can help!
Though the above information certainly is not an all inclusive list of items to include in your marijuana microbusiness business plan, it does provide a fair overview of what to expect. Our team of professionals can help you explore and discuss additional inclusions for your microbusiness to consider or that may be required. With our diverse experience and expertise in the marijuana industry, our professionals can help your microbusiness write and prepare a one of a kind business plan based on your company’s mission, vision, and unique goal set.