CBD Business Plan Template
If you want to start a CBD business or expand your current CBD business, you need a business plan.
The following CBD business plan template gives you the key elements to include in a winning CBD company business plan.
CBD Business Plan Example
I. Executive Summary
Business Overview
[Company Name] is a new CBD shop located in [insert location here] that sells a variety of hemp and CBD-infused products. Our products can help customers manage their chronic pain and anxious feelings or generally support their overall well-being.
The shop will offer a wide variety of CBD and hemp products to choose from, including edibles, oils, topicals, and capsules.
Products Served
[Company Name] will offer customers a wide range of CBD and hemp products. Some of our initial products will include:
- Oils
- Edibles
- Topicals and body care products
- Capsules
- Flowers
Customer Focus
[Company Name] will primarily serve the residents who live within a 5-mile radius of the store. The demographics of these customers are as follows:
- 82,543 residents
- Average income of $42,000
- 38% married
- Median age of 38 years
Management Team
[Company Name] is led by [Founder’s Name], who has been in the CBD/hemp business for [X] years. Before starting [Company Name], he worked at several CBD/hemp shops, spending most of that time in management positions. As such, [Founder’s Name] has an in-depth knowledge of the hemp/CBD business, including the operations (e.g., running day-to-day operations) and management (e.g., staffing, marketing, etc.) sides of the industry.
Success Factors
[Company Name] is uniquely qualified to succeed due to the following reasons:
- There are currently very few CBD/hemp stores in [insert location here], meaning there is little competition.
- Our location is in a high-volume traffic area and thus will be highly convenient to a significant number of passersby each day.
- The management team has a track record of success in the CBD business.
- With more relaxed state and local laws, CBD and hemp products are increasing in popularity and demand.
- The residents of [insert location here] overwhelmingly support the use of CBD and hemp products, meaning we have a large demographic that will potentially patronize our business.
Financial Highlights
[Company Name] is currently seeking $370,000 to launch. Specifically, these funds will be used as follows:
- Store design/build: $200,000
- Initial inventory: $50,000
- Working capital: $120,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
Top line projections over the next five years are as follows:
| Financial Summary | FY 1 | FY 2 | FY 3 | FY 4 | FY 5 |
|---|---|---|---|---|---|
| Revenue | $560,401 | $782,152 | $1,069,331 | $1,379,434 | $1,699,644 |
| Total Expenses | $328,233 | $391,429 | $552,149 | $696,577 | $776,687 |
| EBITDA | $232,168 | $390,722 | $517,182 | $682,858 | $922,956 |
| Depreciation | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 |
| EBIT | $225,168 | $383,722 | $510,182 | $675,858 | $915,956 |
| Interest | $6,016 | $5,264 | $4,512 | $3,760 | $3,008 |
| Pre Tax Income | $219,152 | $378,458 | $505,670 | $672,098 | $912,948 |
| Income Tax Expense | $76,703 | $132,460 | $176,985 | $235,234 | $319,532 |
| Net Income | $142,449 | $245,998 | $328,686 | $436,864 | $593,416 |
| Net Profit Margin | 25% | 31% | 31% | 32% | 35% |
II. Company Overview
Who is [Company Name]?
[Company Name] is a new CBD shop located in [insert location here]. We sell a wide variety of high-quality organic CBD products for all our customer’s needs. Whether they need edibles to help with their anxiety or cream to reduce their chronic pain, [Company Name] will be able to provide them with what they need for a moderate price.
[Company Name]’s History
[Company Name] is run by [Founder’s Name], who has been in the CBD business for [X] years. He managed another local CBD shop but noticed that the shop was located in an undesirable location. He also believed that the shop did not sell a wide enough variety of CBD products to keep customers coming back. So, he decided to start his own CBD store that would be in a more convenient location and offer a greater variety of products.
[Founder’s Name] incorporated [Company Name] on [date of incorporation]. He has been primarily running the business online from his home but has found a potential retail location to start selling products in-store. Once the lease is approved, all operations will run from there.
Since incorporation, the company has achieved the following milestones:
- Found a retail location and signed a Letter of Intent to lease it
- Developed the company’s name, logo, and website located at [website]
- Created the product list and found companies to source the inventory
- Created the online store and began selling products
- Began developing a social media presence
[Company Name]’s Products/Services
Though the list of products will expand once the retail store is established, the current list of CBD products for [Company Name] includes:
- Oils
- Edibles
- Topicals and body care products
- Capsules
- Flowers
III. Industry Analysis
There has never been a better time to open a CBD or hemp business. With increasing public popularity, and more lax state and local laws, CBD and hemp product sales are increasing exponentially. Furthermore, as more people educate themselves about the benefits of these products, a larger customer base will be interested in buying them.
According to Future Market Insights, the CBD oil market is expected to exhibit a compound annual growth rate (CAGR) of 31.50% annually over the next 10 years and has already seen a CAGR of 69.2% over the past five years. Very few other industries are experiencing this kind of growth, so this is very promising.
The only potential challenge is if current state laws get repealed or overturned, which could restrict the sale and use of CBD, hemp, and marijuana products. This is unlikely, given that [insert location here] has an overwhelming approval of these products, but it is always a possibility.
IV. Customer Analysis
Demographic Profile of Target Market
[Company Name] will serve the community residents of [company location] and its surrounding areas.
[Company Name] is a progressive community that overwhelmingly voted for the legalization of marijuana in their region. Therefore, this community is eager to buy CBD and hemp products from local businesses. The community primarily consists of middle-class workers who are in need of products that can help them relax after a long day of work.
Customer Segmentation
We will primarily target the following three customer segments:
- Millennials: Millennials are the most eager to buy CBD and hemp products. In fact, some studies say that about half of millennials have tried CBD products at one point. Though the popularity of these products is rising among other generations, it is clear that millennials will make up a significant portion of our customer demographic. And with a median age of 38 years, it is clear that millennials make up a substantial portion of the population of [insert location here].
- Young Adults: Gen Z is the second most likely generation to use hemp and CBD products frequently. Though much of the generation is still underage, those that have reached adulthood are likely to buy CBD products often. [insert location here] has a sizable population of young adults that will be eager to visit our shop.
- People With Health Conditions: The greatest benefit of CBD is that it can help bring relief to people who live with chronic physical and mental health conditions. We will market our products as additional options to find relief in addition to their doctor-prescribed treatment. Since there are many hardworking residents in [insert location here], we expect many of them will be looking for natural remedies to their physical or emotional pain.
V. Competitive Analysis
Direct & Indirect Competitors
The following companies are located within a 10-mile radius of [Company Name], thus providing either direct or indirect competition for customers:
Hemp House
Established in 2019, Hemp House has quickly become a popular location for CBD and hemp in [insert location here]. They offer a variety of products to downtown customers, including vape pens, edibles, oils, and more.
While we expect Hemp House to continue to thrive, its location is inconvenient to much of the city. To visit the shop, most customers must drive downtown and pay for parking. [Company Name]’s location will be far more convenient for customers who live on the outer edges and suburbs of [insert location here].
CBD Snacks Inc.
CBD Snacks opened in 2021 as the city’s center for all edibles. Whether it be chocolates, gummies, brownies, or anything else, CBD Snacks has you covered.
While they are popular for their edibles, CBD Snacks does not offer any other hemp or CBD products. That means that although CBD Snacks will continue to thrive, [Company Name] will remain competitive by offering capsules, topicals, and oils as well.
Lilac City Healing
Lilac City Healing has been the go-to location for all forms of natural healing and wellness products. Primarily selling teas, herbs, essential oils, and similar products, the shop recently started selling CBD oils as well. Though these oils are not a major offering, they have been increasingly popular with their consumers.
While Lilac City Healing will continue to thrive, they do not specialize in CBD products, so these do not make a significant portion of its profit. Furthermore, we will have more specialized knowledge of CBD products that customers will value.
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. These advantages include the following:
- Location: [Company Name] will set up shop in a high-traffic area that is easily accessible by many residents of [insert location here].
- Variety of products: While other stores may have specialties, [Company Name] will be home to a wide variety of CBD and hemp products to cater to residents’ needs.
- Moderate Pricing: CBD and hemp products can be quite pricey, and soaring demand only makes this worse. [Company Name] will remain competitive by selling our products for more moderate prices and offering coupons and deals to returning customers.
- Management: Our management team has years of experience in the CBD business that will help our business market its products effectively and operate efficiently.
VI. Marketing Plan
The [Company Name] Brand
[Company Name] seeks to position itself as a respectable, upper-middle-market competitor in the local CBD shop landscape. Customers can expect to receive the highest quality CBD and hemp products for a price somewhere between discount chains and luxury establishments.
The [Company Name] brand will focus on the Company’s unique value proposition:
- Convenient location
- Significant personal attention
- Wide variety of CBD and hemp products
- Online ordering service
- Friendly, customer-focused environment
- Moderate pricing
Promotions Strategy
[Company Name] expects its target market to be individuals working and/or living within a 5-mile radius of its location. [The Company’s] promotions strategy to reach these individuals includes:
Direct Mail
[Company Name] will blanket neighborhoods surrounding its locations with direct mail pieces. These pieces will provide general information on [Company Name], offer discounts, and/or provide other inducements for people to visit the store.
Local Publications
[Company Name] will announce its opening several weeks in advance through publicity pieces in multiple local newspapers and publications. Regular advertisements will run to maintain exposure to relevant markets. Community newspapers and hemp-related publications will be a major promotion effort.
Customer Loyalty Programs
[Company Name] will create a winning customer loyalty program to keep its best clients coming back again and again. The program will include discounts, deals, and promotions that non-loyalty customers will not have access to.
Ongoing Customer Communications
[Company Name] will maintain a website and publish frequent promotions and events.
Social Media
[Company Name] will maintain a solid social media presence to further engage with customers and get suggestions for new products and improvements. Our social media accounts will offer unique promotions and discounts that customers can utilize.
Word of Mouth Marketing
[Company Name] will encourage word-of-mouth marketing from loyal and satisfied clients. The Company will use recommendations and word-of-mouth marketing to grow the customer base through the network of its existing customers. The Company will be incentivizing its existing customer base to encourage their friends to come by and check out our selection.
Pricing Strategy
[Company Name] pricing will be moderate, so customers feel they receive great value when visiting our shop. Pricing will be similar to or lower than the nearby competition.
VII. Operations Plan
Functional Roles
In order to execute [Company Name]’s business model, the Company needs to perform many functions, including the following:
Administrative Functions
- Marketing functions
- Bookkeeping functions
- Hiring and training staff
- Sourcing suppliers and managing supplier relations
- Website and social media management
Sales And Customer Service
- Providing customer service
- Stocking and maintaining store
- Payment processing
- Fulfilling online orders
- Janitor/maintenance personnel to keep the store clean
Milestones
The following are a series of steps that lead to our vision of long-term success. [Company Name] expects to achieve the following milestones in the following [xyz] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize lease agreement |
| [Date 2] | Design and build out [Company Name] |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Kickoff of promotional campaign |
| [Date 5] | Launch [Company Name] |
| [Date 6] | Reach break-even |
VIII. Management Team
Management Team Members
[Company Name] is led by [Founder’s Name], who has been in the CBD/hemp business for [x] years. Before starting [Company Name], he worked at several CBD/hemp shops, spending much of his experience as a manager. Throughout his experience, he has acquired an in-depth knowledge of the operations and marketing of running a CBD business. He also has connections with local suppliers and growers who can help stock our inventory.
Hiring Plan
[Founder’s Name] will serve as the store manager. In order to launch our shop, we need to hire the following personnel:
- Cashiers/Sales Associates (2 to start)
- Stock/Inventory Associates (1 to start)
- Assistant Managers (1 to start)
- Maintenance Personnel (1 to start)
- Administrative Personnel (for marketing, bookkeeping, etc.) (1 to start)
IX. Financial Plan
Revenue and Cost Drivers
[Company Name]’s revenues will come from the sales of its products. The Company will have a large selection of high-quality CBD and hemp products to cater to a broad spectrum of customers in its target market.
The major costs for the company will be inventory costs, staff salaries, and rent. In the initial years, the company’s marketing spending will be high as it establishes itself in the market.
Capital Requirements and Use of Funds
[Company Name] is currently seeking $370,000 to launch. Specifically, these funds will be used as follows:
- Store design/build: $200,000
- Initial inventory: $50,000
- Working capital: $120,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
Key Assumptions
The following table reflects the key revenue and cost assumptions made in the financial model:
| Number of customers per day | |
|---|---|
| FY 1 | 75 |
| FY 2 | 100 |
| FY 3 | 125 |
| FY 4 | 150 |
| FY 5 | 175 |
| Annual Lease (per location) | $50,000 |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRE-TAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
