Franchise Advice
SWOT up! A
Richard Holden explains the benefits of preparing a robust analysis of your business proposition when approaching a lender for funds
SWOT (strengths,
weaknesses, opportunities, threats) analysis can prove to be a really useful tool for new business owners since
it focuses on the internal strengths and weaknesses that you, your staff, products, and business all bring to the enterprise. At the same time, it looks at the external opportunities and threats that may have an impact on your business both now and in the future, such as market and consumer trends, changes in technology, legislation, or financial issues.
To complete a SWOT analysis, jot down the four headings, then, beneath the appropriate heading, list relevant factors – good and bad – affecting your business. Don’t worry if some subjects appear under more than one heading and remember that an issue that appears to be a threat could also represent a potential opportunity. Take a look at the example on the following page for guidance.
Know your strengths Take time to consider what you believe are the strengths of your business. These could be seen in terms of your staff, products, customer loyalty, processes, or location. Evaluate what your business does well relative to your competitors. Also try to include some personal strengths and characteristics of your team as individuals.
Recognise your weaknesses Take an objective view of every aspect of your business. Ask whether your products and services could be improved. Think about how reliable your customer service is, or whether your supplier always delivers. Try to identify any area of expertise
that is lacking in your business. Be as honest as you can in listing weaknesses. Don’t just make a list of mistakes that have been made, try instead to see the broader picture and learn from what happened. It also helps to get an outside view – your own perceptions may not always match reality.
Spot the opportunities The next step is to analyse external opportunities; these may relate to competitors who are underperforming, emerging technology that could benefit you, legislative changes, new market trends, and consumer buying habits, all of which could work, commercially, in your favour.
“Remember – an issue that appears to be a threat could also be an opportunity”
Watch out for threats Some threats are tangible, such as the knock-on effects of a global economic crisis or the arrival of a new competitor, but others may be only intuitive guesses that result in nothing. Even so, it’s far better to remain vigilant, because if a potential threat does become real, you’ll be able to react much more quickly, having already considered your options. Think about the worst things that
could realistically happen, such as losing your customers or facing a new product better than your own. Listing your threats will help you to plan for these risks.
May 2018 |
BusinessFranchise.com | 25
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