The SWOT should always be part of your business plan

SWOT. It should also form part of your business plan. Firstly decide who to involve in the analysis and make sure you involve different levels in order to get a rounded opinion – think about involving different sorts of stakeholders – customers as well as staff for example then brainstorm ideas. It’s also useful when asking staff to identify SWOTS to keep them anonymous in order to encourage absolute honesty. Once you have your SWOT analysis remember that it is an ever evolving process and what’s a strength today may be a weakness tomorrow so revisit your analysis regularly.

When listing your strengths always think the phrase “which means that…” and write down the answers. For example, a strength may be sound finance which means that you have access to a variety of sources of credit.

So what sorts of issues should you be considering?

• Strengths – These are usually fairly easy to identify, through talking to your customers and suppliers and looking at sales records. For most businesses, there will be four categories that strengths fall into: sound finances, marketing, skills and systems of your management and personnel and also production, e.g. premises or source of materials. Be aware though that highlighting strengths is often also a way of identifying weaknesses and threats – you could be a business leader but bureaucratic, or your strength may lie with a key person who could resign.
• Weaknesses – Many businesses know the areas where they are weak but tend to ignore them, so this analysis is a good way of dealing with any underperformance issues. The areas of potential strength that have been highlighted can also be areas of weakness, so flaws could be poor financial management, lack of marketing focus, employee weaknesses or inefficient production, premises and plant.
• Opportunities – Think about what is happening outside your own business which give your business opportunities. Examples could include a change in an organisation or individual that directly affects your business; perhaps the insolvency of a competitor or opportunity to recruit a key employee from them. It could also be a change in the general business environment, for example a shift in legislation or a new available technology.
• Threats – Potential dangers to your business are important to identify – they could be minor but they could also have devastating effects. Just as areas of strength and weakness are interchangeable, so are areas of opportunity and threat. A change involving an organisation or individual can be good, but also bad, news – a new competitor could emerge or you could lose a significant customer. A development in the wider business environment could also be detrimental.

Once you have identified all these areas, think about how you can use this knowledge. Capitalise on opportunities that play to your strengths, address any areas of weakness and consider how you can protect your business against the possible threats and put together action plans to address the issues. Finally, make sure you can justify your conclusions, through business records, data on competitors, market research or specialist consultants. You can then make sure your analysis is based on realistic information and can be used to maximum effect. Read this too: http://lesarmitage.com/2009/07/28/your-business-whats-it-worth-and-why/