How To: Your Business Plan – Part 4. SWOT
How To: Your Business Plan – Part 4. SWOT
The cornerstone of success for any business is structured and strategic planning (SWOT), and your business plan is a critical component of this. As you work through your business plan document, you will gain a detailed understanding of what’s working, and what could be improved. Every business will have its own unique set of challenges and strengths, and as a potential owner, your role requires you to view these at both a macro and micro level.
The 4th section of your business plan is your SWOT analysis and your critical success factors, where you’ll examine exactly where the business is making progress, what areas need more focus, and what are the “make or break it” actions that must be executed.
SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities and Threats, and this analysis asks you to assess all corners of the business with a critical eye.
Similar to other sections of your business plan, your SWOT analysis works well in a table format – list your SWOT item in the left column, and on the right, detail how you could maximise or minimise its impact.
For example, a retail business strength may be that you are the sole country stockist for a specific, in-demand product. You would maximise this strength by ensuring your supplier contracts are regularly reviewed for improvements and keep an eye on any copycat products in the market.
Remember that your strengths and weaknesses are often exclusively internal business factors (existing within the business), while your opportunities and threats are usually external to your business – for example, potential media coverage of your business would be an external opportunity.
Strengths may be easy to identify at first, so you can use this as an opportunity to see fledgling strengths in your business that may require more focus or finance to grow. Equally, you are able to pinpoint what the root cause is of any business weaknesses and make a plan to address these issues where possible.
Once you have completed the analysis, you’ll then build on this by writing your SWOT summary, which is where you’ll determine the ideal strategic direction for the business to move forward with.
There are four key SWOT strategies to select from for your SWOT summary:
S-O: Maximise your internal strengths to increase your external opportunities.
W-O: Minimise your internal weaknesses by increasing your external opportunities.
S-T: Maximise your internal strengths to reduce your external threats.
W-T: Reducing your internal weaknesses and avoiding external threats.
One of these options will fit your business best, and make the most of what you are already seeing success. Once you have selected, detail this strategy and how you plan to execute it step-by-step.
Understanding the process of a SWOT analysis and strategy will allow you to apply these assessment skills to other decisions you’ll meet as a business owner, from marketing campaigns to grow your team.
Many business owners choose to review and refresh this analysis every 6 months, with changes to the market, client base, technology and overall business goals influencing new threats and creating new opportunities.
Critical Success Factors
To finalise this section of your business plan, the next step is to list your critical success factors below – these are the must-do steps that will create continued success for your business.
You will find yourself updating this part regularly as your business grows, and these factors will play a pivotal role especially in the time immediately after the business purchase, where you’ll require a solid game plan to work from.
Remember, these will be your high-level goals that are essential to your business’ success and require consideration beyond simply your standard day-to-day operations.
Your CSFs also need to be clearly understood and supported by your team – generally the more senior-level staff – as they will be able to keep track of these actions, their implementation and give feedback. Although you will set direction, you may like to check in with the different department leads to your business at this time, to ensure everyone is on the same page.
Your SWOT analysis and critical success factors are an essential driver behind the focus and direction of your business and having completed this section of your business plan, you’ll have a ‘birds-eye’ perspective on where your energy and efforts should be allocated, as well as how to maximise your strengths.
Next time, we will be looking at market research, part 5 of your business plan, which will further develop and utilise the strategies you’ve worked on in this section, specifically across external threats and opportunities.