Executive Summary
The proposed project is a combination of a marijuana dispensary, a hookah lounge, and a restaurant. Due to the size of the venture, it is necessary to give thorough attention to each of the three elements in particular in addition to the whole project in general. The company’s name is MaryJane’s Toke and Tavern. It will be located in the center of the city and will be an ideal community dispensary store.
The facility that we would prefer to use is currently being leased, but we are planning to buy it in half a year since the owner has put it up for sale. We plan to carry out a small facelift, but this should not require much financial expense. The facility has been used as a store and its condition is quite satisfactory. However, it will be necessary to change the interior. We want to make the three departments of the project distinguishably different, but at the same time, they should all be united by some common theme. The variant that sounds the most effective and affordable is to decorate the restaurant and hookah lounge in the Arabic style and include some similar elements in the dispensary.
Mission, Vision, and Values
The mission of the venture is to provide customers with high-quality products for an affordable price. We want to create a large merged project of three facilities, each of which is of great interest to modern people.
Our vision is to become leaders in the US market focused on medical marijuana and hookah and arrange for very comfortable conditions for the customers.
The values of our enterprise are integrity, responsibility, quality, and diversity.
Definition of The Problem
In creating our business plan, the key elements suggested by Marting Zwilling will be used as a framework. The first component that the author advises should be included in a business plan is the definition of the problem (Zwilling). The major motivation for opening MaryJane’s Toke and Tavern is that smoking in groups is one of the most favorite pastimes of people. Some like smoking a hookah while others prefer marijuana. In any case, after such an activity, customers’ appetites increase, and they go somewhere else to eat. There are several disadvantages to the lack of a location that would satisfy all of these needs at the same time. Firstly, customers might stay at a hookah lounge of marijuana dispensary longer if they had an opportunity to have a snack from time to time. Instead, people have to leave a place where they feel relaxed and have a good time with their friends and go to some café or home.
Secondly, the owners of such dispensaries and lounges lose profit due to their inability to cover all clients’ needs. If visitors stayed for a snack in the same place where they smoke, they would be spending their money with the same businessman, which would be highly profitable for the owner. Also, after having something to eat, they might want to have another round of smoking, which would again bring advantages for the business owner. Thirdly, having a marijuana dispensary, a hookah lounge, and a restaurant in the same place would help to analyze people’s preferences and habits. It would be possible to find out what kind of hookah customers prefer to smoke and what food they like to consume after that. Also, it would be easy to investigate people’s favorite marijuana products and predict future market needs. Currently, there is no smoking lounge that would cater to all of the visitors’ needs in the same location in the state of New York. Therefore, the lack of a facility that might combine a hookah lounge, a marijuana dispensary, and a restaurant is a big problem that we plan to solve.
Solution and Benefits
MaryJane’s Toke and Tavern suggest a single solution to all the problems mentioned above. By combining three facilities in one place, it will be possible to create the most favorable environment for customers who want to relax and spend time with their friends. Also, the project will be profitable for business owners. These two aspects are taken into consideration when defining the benefits of the Tavern.
Modern entrepreneurs are well aware of the fact that they need to make their business customer-oriented in order to be successful. It is crucial for every organization to create a high level of customer satisfaction and serve their clients’ needs (Kurtz 4). While in the sphere of technology, it is possible to overlook some issues because people will still come to buy products if they really need them, the sphere of entertainment and food is not entitled to such allowances. If people do not like the place, they will not return there. That is why MaryJane’s Toke and Tavern is the best solution for those clients who prefer spending a long evening with their friends without needing to worry about where they can have a snack after smoking.
Customer satisfaction combines art with science. As art, it depends on creativity and imagination. As a science, it requires experience, skill, and technical knowledge (Kurtz 4). When creating the idea of MaryJane’s Toke and Tavern, we considered these aspects and made sure that the plan will explain how we aim to reach customer satisfaction. The Tavern will allow groups of people to enjoy a smoking experience together by having two options available: marijuana and hookah. In addition, it will give visitors the possibility to take breaks in between smoking sessions. Furthermore, we will cater to the need for “munchies,” especially among marijuana smokers. Thus, the benefits of MaryJane’s Toke and Tavern are impressive: it will enable people to spend quality time with their friends without having to be in a hurry to find somewhere else to have a snack. Customers will love the opportunity to have several needs satisfied in one place, and Tavern will become their favorite place.
Industry and Market-Sizing
Out of the three elements constituting the business plan, the marijuana and hookah industries need the most attention. The restaurant business has existed for much longer, and its specifications and evolution do not present much interest. The industry of smoking has been evolving rapidly over the past decades. The marijuana trade develops “at a breakneck pace,” allowing a large number of companies to find a niche in the market and develop successful enterprises (“Evolution of Marijuana Industry”). Due to the expansion of its popularity, a variety of new kinds of business keeps appearing, providing many services and products for consumers (“Evolution of Marijuana Industry”). Among the most successful innovators in the marijuana business are such companies as Kush Bottles, Inc., SinglePoint, Inc., Scott’s Miracle-Gro Co., Medical Marijuana, Inc., and Canopy Growth Corp. The development of the market was greatly promoted by the laws legalizing marijuana.
In Vermont, its use is legal for adults older than twenty-one. In Maine and Massachusetts, retail stores will be opened in 2018. In Oregon, consuming marijuana will be soon allowed in special licensed places similar to tobacco lounges (“Evolution of Marijuana Industry”). Organizations involved in this business are well aware of the opportunities presented by new laws and regulations, and they strive to make progress in their areas. An example of an innovative approach is SinglePoint’s strategy to provide non-plant-based options and additional services to growers and consumers of marijuana, as well as to dispensaries (“Evolution of Marijuana Industry”). Because of federal restrictions, marijuana businesses do not have access to banking options, but there have been predictions that this situation will change. Meanwhile, SinglePoint has launched an online purchase opportunity with the help of its subsidiary. As soon as banking options are allowed, SinglePoint will be the pioneer in providing payment solutions to cannabis enterprises (“Evolution of Marijuana Industry”). Companies like SinglePoint recognize the opportunities provided by the marijuana business and do everything possible to take advantage of each one that is available.
Hookah industry opportunities have also increased significantly in the US over the past ten years. In 2008, there were nearly five hundred hookah bars in the country, and five new places have been opened every month since then (“Hookah Bar Business Plan”). Approximately one-tenth of hookah smokers in the US come from the Middle East, the rest of them being American citizens who “embraced” hookah culture (“Hookah Bar Business Plan”). Such impressive numbers signify that the industry is rather profitable and has positive prospects.
The market for marijuana and hookah smokers can be roughly divided into several segments:
- Middle Eastern Americans. These are immigrants or people whose families originated from the Middle East. For these consumers, hookah bars present a connection with their native traditions and culture. Since it is not typical for Muslims to drink alcohol, they tend to avoid traditional American bars. Therefore, hookah lounges give these people an opportunity to socialize without breaking any rules set by their culture.
- Students. College and university students are people who enjoy spending time with friends but do not have much money at their disposal. In places like marijuana dispensaries and hookah lounges, students can stay for a long time chatting with their friends without having to worry about huge bills at the end of the evening. Another consideration that makes these consumers participate in the market is that alcohol cannot be drunk by anyone under the age of twenty-one, while smoking hookah is not prohibited for this age group.
- Young professionals. These are people aged between twenty-two and thirty-five who graduated from a university and have a job. They do not enjoy noisy places and prefer to spend a long quiet evening with a pleasant company. The representatives of this segment are sometimes deterred from visiting hookah lounges because of noisy groups of students, but they may enjoy spending time in age-segregated marijuana dispensaries instead.
- Tourists. Since the business is very popular, smoking marijuana and hookah is one of the attractions for tourists visiting the area. They are willing to try something unusual that may not be available in their own local areas.
The rapid development of the industries and a variety of preferences among various consumer groups show that a facility combining a marijuana dispensary, a hookah lounge, and a restaurant will bring great profit and earn clientele loyalty due to satisfying a range of their needs simultaneously.
Business Model Explanation
Each component of MaryJane’s Toke and Tavern presents great opportunities for development. The number of people who smoke hookah is growing every year. Medical advantages of marijuana use have been proved by scholars and are still being investigated (Koppel et al. 1556-1557). The popularity of a restaurant as the third element of the enterprise is explained by people’s preference to have something to eat after they have been smoking. Thus, the overall potential for business growth is huge.
The money made on business will come from the following sources:
- customers will pay for products and food consumed at a marijuana dispensary, hookah lounge, and the restaurant;
- hookah sets will also be available for sale for home use or as presents;
- a variety of tobacco products will be suggested for sale.
Out of the money paid by the customers, the part will be used for purchasing the necessary inventory, another part will be used for salary and expenses, and the rest will constitute the profit.
Sustainable Advantage and Competition
One of the crucial aspects defining the success of a business is a sustainable competitive advantage (Amini et al. 193-194). Companies that are able to sustain their competitiveness are more likely to surpass their competitors and corner the market (Liu 2824). That is why it is important to know our major competitors and outline ways in which we can outperform them and reach a sustainable competitive advantage.
The main competitors will be viewed in the realms of marijuana dispensaries and hookah lounges. Cannabis was legalized in New York in 2015. However, there are few places where people can buy medical marijuana in the city (Drury). One of these options is Columbia Care – the city’s first medical cannabis dispensary. This healthcare center was opened in 2016, but it has not earned much popularity due to several issues. Firstly, there are strict regulations on who can get a prescription. Secondly, the prices are too high for the majority of people, so there are not many customers (Drury). While tourists are willing to buy products from the dispensary, regulations and prices stop them from doing so. The second option for marijuana purchase is Vireo Health. The third choice is Bloomfield Industries (Drury). Thus, it is obvious that there are not enough places where people could legally buy marijuana in New York.
The choice of hookah bars in the city is much more diverse. There are many places to visit, the most popular ones being Aziza Café and Lounge, Kazuza, Chill Bar and Hookah Lounge, Gardenia Terrace, Scarlet Night, and Ignited Restaurant and Lounge (“The Best Ten Hookah Bars”). There is no lack of hookah bars in New York, but our competitiveness is created due to the combination of several facilities in one.
The restaurant is the element of our venture that has the largest number of competitors. However, we plan to attract customers due to the unique possibility of two highly popular smoking activities. Our restaurant will serve burgers and other snacks that can be cooked quickly and sate people’s appetites.
The major competitive advantage of MaryJane’s Toke and Tavern is that it combines three places where people can spend time with their friends. Each of the venues will serve as an advertisement for the other two. Thus, we will be able to increase the client base by inviting customers to try the products in all three parts of the Tavern. While there are many restaurants and hookah bars and a few marijuana dispensaries in New York, there is not a single one where all three possibilities are merged.
Marketing and Sales Strategy
The key element of our marketing and sales strategy will be spreading information about MaryJane’s Toke and Tavern. We are planning to employ several methods of advertising:
- publishing an advert in two local newspapers;
- running an advert on the local radio station;
- positioning banners in several places around the city;
- sharing information by word of mouth and asking our friends and acquaintances to do the same.
We will use the following marketing and sales strategies:
- open the Tavern with a huge party featuring DJs, discounts, and sampling;
- ensure that there is a great variety of tobacco products, alcoholic drinks, and food at the Tavern;
- introduce our facility to organizations via letter and brochures;
- create a friendly atmosphere and hire pleasant personnel;
- introduce a loyalty scheme according to which regular customers will have bonuses and discounts;
- provide our personnel with opportunities for professional development.
In order to implement the strategy, we have set the following milestones:
- check the availability of the business name;
- rent a facility;
- register the business;
- open a corporate bank account;
- apply for tax payer’s ID;
- obtain insurance;
- apply for a license;
- analyze feasibility;
- create a business plan;
- create promotional materials;
- hire employees;
- buy the necessary equipment and accessories;
- design the company’s website;
- address safety measures;
- establish business connections with suppliers.
Executive Team and Employees
Any successful business depends not on the idea or investments but on the people who are working in it. The executive team will include the CEO, the chief operating officer, and the chief financial officer. Each of these people will be responsible for a large portion of work focused on a particular dimension. They will also give directions to the managers and coordinate the work of the Tavern. The CEO will have the biggest responsibility, and will be accountable for the following:
- increasing the efficiency of the business through communicating the mission, vision, and values;
- planning and monitoring the outcomes of work;
- assigning people to positions and evaluating their work;
- creating a positive atmosphere for customers and employees;
- assessing the success of the venture.
Another important thing in the preparation for launching a business is hiring personnel. For our Tavern, it is crucial to hire the employees who will be dedicated and willing to satisfy customers. We will perform a thorough analysis of each candidate’s application form and conduct interviews with all potential employees. The team of people needed for our business is diverse and consists of the following specialists:
- A hookah bar manager:
- takes care of the activities in the hookah lounge on a daily basis;
- communicates with vendors;
- reports to the CEO about achievements and losses;
- manages clients’ inquiries and complaints;
- trains new employees.
- A marijuana dispensary manager:
- manages the daily activities at the dispensary;
- communicates with vendors;
- reports to the CEO about achievements and losses;
- manages clients’ inquiries and complaints;
- trains new employees.
- A restaurant manager:
- prepares the menu;
- analyzes customers’ preferences and makes sure that their favorite food and drinks are always available;
- checks the performance of the table attendants;
- makes sure that all the necessary equipment is available;
- reports to the CEO and performs other duties assigned by him.
- A bartender:
- plans the menu and prepares drinks;
- serves drinks to customers;
- checks visitors’ IDs to make sure that they are eligible to consume alcohol;
- communicates with clients;
- makes an inventory of the supplies that need to be replenished.
- An accountant:
- creates the budget;
- makes financial reports for the CEO;
- analyzes the company’s feasibility and predicts expenditure changes;
- deals with taxes;
- manages financial operations.
- A DJ:
- entertains the visitors;
- chooses the most appropriate music for different times of the day;
- communicates with customers;
- makes people feel relaxed and encourages them to stay for a long time.
- Table attendants:
- welcome the clients;
- serve visitors in a pleasant and respectful way;
- evaluate customers’ needs and suggest products;
- know everything about the products suggested by the company;
- determine when visitors have had too much alcohol and politely refuse to serve them.
- Security officers:
- guarantee security to the visitors and employees;
- control parking;
- check the Tavern and the area around it regularly;
- help employees to maintain security.
- Cleaners:
- clean the utensils, glassware, and dishes;
- clear ashtrays;
- clean the restaurant, the lounge, the dispensary, toilets, and other areas;
- clean the doors and windows.
Funding Requirements
Taking into consideration the scale of the business, funding needs are large. However, we plan to reimburse the expenses in only a few years of successful operating. In order to launch MaryJane’s Toke and Tavern, we will need an estimate of $141,550 that will be used for the following needs:
- registering the business in New York: $900;
- licensing expenses: $1000;
- insurance: $2,100;
- advertising and promotion: $2,500;
- start-up inventory: $15,000;
- software and equipment: $12,000;
- rent for 6 months: $48,000;
- storage hardware: $2,800;
- launching a website: $450;
- cost of opening party: $3,800;
- salary for 3 months: $50,000;
- miscellaneous: $3,000.
Financial Forecast
The growth assumptions for this kind of business are optimistic. If a place like a marijuana dispensary or a hookah lounge is comfortable and relaxing, there is a high likelihood that customers will be attracted there. In our case, three types of business will be combined in one place, which increases the chances of success. Another reason that we feel optimistic about our profit is that the business will be located in a busy city area, thus enhancing the possibility of attracting more clients.
Based on the analysis of the current market situation and on our predictions, the following financial forecast is suggested:
- the first fiscal year: $200,000;
- the second fiscal year: $380,000;
- the third fiscal year: $800,000.
Exit Strategy
We are not considering the option of selling our business so far. We are highly interested in keeping it and remaining the owners as long as it is profitable. In spite of this, in case the business starts to deteriorate for some unpredicted reasons, we will employ the strategy of merger and acquisition, where we will either sell the company to a similar organization or sell it to another firm. However, so far, this situation seems unlikely since we are highly interested in launching this business and developing it to become the most successful venture of its kind.
Works Cited
Amini, Alireza, et al. “Effectiveness of Marketing Strategies and Corporate Image on Brand Equity as a Sustainable Competitive Advantage.” Interdisciplinary Journal of Contemporary Research in Business, vol. 4, no. 2, 2012, pp. 192-205.
Drury, Adam. “Where to Buy Medical Marijuana in New York.” Green Rush Daily, 2017. Web.
“Evolution of Marijuana Industry Creates Wealth of Opportunity for Companies With Foresight and Action.” PR Newswire, 2017. Web.
“Hookah Bar Business Plan.” Bplans, n.d. Web.
Koppel, Barbara S., et al. “Systematic review: Efficacy and Safety of Medical Marijuana in Selected Neurologic Disorders: Report of the Guideline Development Subcommittee of the American Academy of Neurology.” American Academy of Neurology, vol. 82, no. 17, 2014, pp. 1556-1563.
Kurtz, David L. Contemporary Marketing. 16th ed., CENGAGE Learning, 2014.
Liu, Yang. “Sustainable Competitive Advantage in Turbulent Business Environments.” International Journal of Production Research, vol. 51, no. 10, 2013, pp. 2821-2841.
“The Best Ten Hookah Bars in New York, NY.” Yelp, n.d. Web.
Zwilling, Martin. “The Ten Ingredients of a Great Business Plan.” Forbes. 2010. Web.