Business Planning and Cost Analysis for Cannabis Labs

“If you don’t know where you are going, you’ll end up someplace else.” – Yogi Berra

Whether you’re setting up an in-house microbiology laboratory or a compliance testing laboratory for microbiology testing, you’ll need a solid business plan. A business plan addresses the needs, goals, and the main considerations of the lab to fuel success. The Anatomy of a business plan is important to ensure the project encompasses all considerations to drive operational goals and profitability.

Anatomy of a Business Plan

1. Executive Summary: Business Description and Structure
2. Market Research and Strategies
3. Management and Personnel
4. Equipment and Vendor Partnerships
5. Financial Documentation

Each component of the Business plan speaks to both the value and benefits of your mission. For instance, if a cultivator’s goal includes attracting investors, cover the benefits to microbiology testing, including:

• Increased efficiency
• Real-time transparency into the quality of your products
• Risk mitigation and prevention
• Added value of verified pathogen-free program for customers
• Brand reputation

“A goal without a plan is just a wish.” – Antoine de Saint-Exupery

Executive Summary: Business Description and Structure

The Executive Summary explains the “who, what, where, when, and whys” driving your business. It is the root of a Business Plan as it provides a synopsis of the business overview and tells the whole story and your mission. This high-level overview describes your strategic focus and direction, leveraging the organization’s core capabilities and strengths with objectives, strategic focus, and direction, and what separates your company from the competition.

Market Research and Strategies

It’s essential to know the opportunity in the market, customer base, and the industry from market research to confirm the viability of your business model and your mission. This is energized by also identifying the ideal customer base, core business values, and differentiators in your operations and the value you provide to your customers and the industry. This information then leads to the creation of the strategy and execution plan.

Management and Personnel

A team with capabilities aligning with your objectives constructs greater functionality, productivity, and profitability while breaking down barriers. The organizational structure outlines personnel needed at start-up, job descriptions, adjacent company culture influences, attracting and maintaining top talent, and addressing future needs.

“Success is where preparation and opportunity meet.” – Bobby Unser

Equipment and Vendor Partnerships

Microbiology cannot be an afterthought. Equipment and vendor partnerships must pair well with your business mission, organizational structure, culture, and local microbiology regulations as necessary. Finding a partner that bridges gaps, offers expertise in both the science of microbiology and the cannabis industry, and will walk together with you equates to easier implementations, operations, and profitability. This is covered more in depth in Lab Set Up – How to Select a Microbiology Testing Method.

Financial Documentation

Analyzing the initial and ongoing financial obligations allows a business to keep expenditures in check, from starting a business and throughout the life cycle of the organization. A Business Plan contains a summary of the current financial situation and budget requests. Balance sheets with both Profit and Loss statements and cash flow statements are impactful to understand your business needs, how your business is tracking, and where additional financing may be needed. Creating and maintaining financial documentation offers a business current insight into financial health and generates the opportunity for future planning and improvement.

A business plan serves as the blueprint and guide for your laboratory operations, sharing the holistic approach to your business goals and strategy. Without it, you’re flying blind and limiting your success. Remember the anatomy of the business plan (summary, research, management, equipment, and financial documentation) and you’ll be fully prepared to fuel success in and move forward with either an in-house or compliance microbiology testing lab.