At Vancity, we see hundreds of business plans each year from new and aspiring entrepreneurs. And from that experience, we know there are five areas in the business plan that entrepreneurs may not spend enough time on: business objective, SWOT analysis, cash flow projection, competitive advantage and market potential.
In this series, I’m going to share some tips on each of these five areas to get your business plan in top shape. In this post, I’ll cover what a SWOT analysis is and why your business needs one.
SWOT is an acronym for strengths, weaknesses, opportunities, and threats. Despite the intimidating-sounding acronym, this is really a process to identify a business’s strengths and weaknesses along with opportunities.
Sounds like a good thing to do, right? Unfortunately, many people don’t spend enough time on it when developing their business plan.
Here is some advice on how to execute your SWOT:
Show your critical side
It’s important to remember that your business plan is not a resume. You’re not writing it for someone else; you’re writing if for you. Your business plan is the place to record all the critical thinking you did as you developed your business idea. It walks you through how to get your business going while weighing the costs and risks, as well as the benefits and opportunities. Enter SWOT analysis!
While the components of SWOT analysis are all important, sometimes swapping the order can make a big difference. Try focusing on opportunities and threats first, then assess your weaknesses and how they interact with those opportunities and threats. Finally, look at how your strengths will directly help you overcome the threats and help you take advantage of those opportunities.
Let’s break the revised acronym down in a little more detail:
This is the place for wishful thinking and realistic dreaming. What other businesses and contacts could you form alliances with, and what trends could you take advantage of? If your business begins to thrive, what additional revenue streams could you tap into, and what future opportunities could you create for yourself?
Ask yourself what is the worst possible thing that could happen at each stage of your business plan. Have friends or family help you generate a series of “What if…” questions. Consider how changes to government regulations (like licensing) could affect your business. Think about factors like technology, fashion, and seasonality. While having potential solutions in mind is key, it’s most important that you have taken the time to acknowledge these potential risks, the realistic costs they could have, and what it would take your business to recover.
It’s important to be honest with yourself here. Where are you lacking when it comes to skills, knowledge, and financing? Again, your business plan is not a resume and you’re not bringing it to a job interview. Don’t try to spin a weakness into a strength. Clearly identify it and include any possible ways to mitigate it.
What are you really good at? This should be the easy part. Show off your business savvy, brag about your sales, and mention any supporting staff and resources you have.
Looking for more support?
Looking for more support to help you complete your business plan? Find out when our next Each One, Grow One small business workshop is happening. The workshop is offered free for members and non-members, and are a great starting place to create your perfect business plan.