There’s no denying that the cannabis industry can be a lucrative career choice. Do you want to open a dispensary, grow hemp, or deliver it? Maybe you want to do it all!
Starting a cannabis business can be a costly endeavor. Any business, but even more so a cannabis business, requires licensing fees, extremely accurate accounting records, and operating costs––all of which can be prohibitively expensive.
Many of the best banks for small business loans operate on the federal scale and are subject to federal banking laws that make lending to a cannabis business nearly impossible. This is why many cannabis business owners and entrepreneurs opt to recruit initial funding from cannabis investors.
Investors can include friends, family, or a proper venture capital fund. Either way, you will need to put together your vision and business plan into an investor pitch deck.
What is a Pitch Deck?
A pitch deck is a short, but detailed, presentation that describes your vision and cannabis business. Not only will it describe how the business will run and be successful, but also what added value it will create in the world.
It should provide enough detailed information to give a potential investor financial information, as well as a description of your personal and unique value.
Your pitch deck should include and answer the following:
- A friendly introduction
Present your logo, company name, and a picture of your product if you have it. Make sure to include presenter names, job titles, and contact information. It’s always good to start off friendly, to make a positive connection with your audience.
- Your “Why”
What is your reason and motivation behind your product?
Any successful business answers a gap or need in the market. Describe the problem you are looking to address in simple terms. Make sure you speak about the current state of the problem, the seriousness of it, the desired future situation, and of course, the benefit a solution will bring to the customer.
- Your solution – or your “What”
Your business will only grow if your solution meets the need. Explain your solution in a concise way. Describe the key benefits and features for the customer, present a business product design template and timeline to develop the design.
- Your Business Model
Show me the money! Explain how you are going to make money. Whether it’s through direct sales, subscriptions, advertising, etc., speak about all the ways your company will generate an income. To serious investors, this is the most important part; they hear about great ideas every day, but they want to see that you are actually capable of executing the vision.
- Your Team
Smart hiring is not only a good business practice, it’s a necessity. List all of your team members and the unique skills, resources, experience, or knowledge they bring to the business. What positions are you recruiting for? Be sure to include partnerships and even professional service providers such as lawyers, CPAs, and more.
- Market Overview
It’s important to do market research to see if your business is really feasible. What is the market size and prospective growth potential? Who is your target customer? Are there any market trends that you are leveraging? What other possible applications are there for your products? How will you reach your customers?
- Cost and Pricing Model
You will need to crunch some numbers and explain your basic financials. Who are your suppliers? How will you develop the product/service? What’s the cost to develop and produce your product? What is the potential sales price to your customer? Map out your expenses and income to show how you will come out on top. Many business people hire a financial team who is familiar with the cannabis industry for this part.
There is always competition in business and if there isn’t, there’s probably not a market. Provide a competitive analysis, and compare your solution to the current approach and major competitors. Keep in mind that the more realistic you are, the more believable your case. This is a good way to show your audience that your business model is well researched and thought-out.
- Social Impact
Not every business has a social impact, but if you really want to sell your business as a bar above the rest, it would be helpful to define one. What is the impact of your product or service? Will your venture have a positive social impact? Describe the values of your company.
- Competitive Advantage
Why choose you? What makes you special from the rest of the cannabis businesses? What are the other businesses missing that you plan to offer?
Conclude the presentation and tie up any loose ends. What are the next steps as a company? What information do you need to move forward?
After the Pitch: What to Expect
Be prepared for a lot of questions. Your investors are going to want to know that you thoroughly researched this business and know what you are doing. The financial information may be an estimate, but you should have research and information to back up your estimates and extensive knowledge of the cannabis market in your area.
Some examples of questions:
- What are your plans for growth?
- The cannabis industry is one of the most regulated industries in the country. Do you have legal counsel and a good accountant already, to help you keep everything in order?
- What’s your plan for the next funding round?
- How will X regulation impact your business (such as the IRC 280E tax clause)?
How to Really Sell It
After all is said and done, the numbers are crunched, and the competition has been outed, the most important part of your pitch deck is your why.
There are many cannabis business owners trying to cash in on the exceptionally fast-growing cannabis and hemp/CBD industry. If you’re going to compete for an investor’s time, money and attention, you have to show them why you’re different from every other investment opportunity they have come across. Think about why you are starting this business––why is cannabis important to you, and what makes your customers special?
If you’d like to speak with one of our financial experts at Northstar Financial Consulting Group to see how we can help start your cannabis business, and set you apart from the rest, send an email to firstname.lastname@example.org or give us a call at 424.274.3188.