SWOT! How It Can Help Your Business Planning
I know that people have been waiting for the Business Enter-Prize to finally take off; just a little more time to get the final pieces into place. So in the meantime, I decided that I would write about something that you will hear quite a lot about when dealing with starting your business, especially in the business-planning stage. I first found out about this when I was studying for my Masters. We had been entered into a business planning competition and one key component is to examine how the business will react to different situations and how situations will impact on your business. So this article will explain this and its usefulness.
As can be seen from the above diagram, this is a useful tool in gaining an insight into the long-term viability of a new business or a new venture/project that a business is going into. It does not guarantee success and may not cover every eventuality (because who can?) but it will put things in better perspective for you. This article will look at each of the squares in a little more detail.
STRENGTHS - As far as I am concerned when it comes to business, there is no such thing as a bad idea. There is an idea that needs a little more work and research. So when it comes to this section, be perfectly honest. Ask people, look for mentors and others who have succeeded where you are looking to work and then make a list. No matter how seemingly bad the idea/venture is, it will have strengths even if all you come up with it is "it's . . . original."
WEAKNESSES - this is the one that people would want to scimp on. No one likes to be told that their idea has flaws. But even the best ideas need working on. And you have to be realistic, especially when it comes to business planning. If you are not, then when problems hit, you will be ill-prepared to deal with them. You have to ask yourself a few questions when looking into this area.
* Does your business lack anything - now or in the future?
* Can it be improved in any way?
* Is there anything that should be avoided? What?
* Are there any gaps (in your knowledge) or deficiencies (in your products)?
OPPORTUNITIES - This gives you, as a budding entrepreneur, a chance to look into specific opportunities that you can take advantage of. Take a look at upcoming trends and see how they can affect business - what opportunities do they present?
THREATS - What kind of problems are you likely to face in the future? Will they affect your business, and in what way?
Doing SWOT analysis is more work than people realise and it can be a real eye opener. When writing business plans, I always include them although it is not considered a necessity. They can show what and how you and the business are getting it right and what needs to be fixed and when. It is not only good for businesses and companies, it can be effective when applied to people too. It is important to not to expect the same results because people and businesses are different even though they operate in the same sector or industry. For example, one business might see 'green' regulations as a threat because it means heavy investment in new equipment and technologies. Another might see it as an opportunity to try new things and perhaps save some money.
A SWOT analysis can help bring issues to the fore and thus is crucial in shaping and determining company policy and future strategies. The advantage of a SWOT analysis is that it's simple and costs nothing except your time to do it. Unfortunately, it can be sometimes too simplistic and may lack focus in what it is supposed to be achieving--thus objectives may not be prioritised and important targets missed.
A SWOT analysis is not an end, it is a means to an end. After you have completed it, you must put what you have learned into action. It is not about writing a pretty list, it is about research, appraisal and implementation.
Take care and God bless...
©Ngozi Nwabineli - November 2009