As 2019 closes and we look forward to a new decade of opportunity, the prudent business owner does so with a plan. A sound business plan is not just a collection of projections and goals. It is more correctly a guide that not only breaks out goals, but includes the steps you are going to take to achieve your goals.
Over my time as a shop owner and business coach, I have worked to hone my skills on the planning phase and I have narrowed down the process of comprehensive business planning to what I consider three basic and essential steps: a SWOT analysis, the WIN Number Drill and finally, the business plan itself. Over the next couple of columns, I would like to share each step, in detail, to help get your 2020 and the next decade off to an amazing and well thought-out start.
Step No. 1 is the SWOT analysis. To make a great plan you must know where you are starting. The SWOT analysis is really just an evaluation of the current state of your business. SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities and Threats. This is an evaluation of what your business has done well (strengths), what are things it lacked, struggled with or failed at (weakness), what areas of business could expand, grow or be added that you might take advantage of (opportunities) and what are potential derailleurs of your business if not recognized and addressed (threats).
Ultimately, a retrospective looking SWOT allows you to be more prudent and thoughtful in building a solid business plan by expanding strengths, addressing and correcting weaknesses, investigating and capitalizing on opportunities and ultimately working to neutralize threats. Strengths and weaknesses are mostly internal facing to the company (think about reputation, location, expertise and experience, fiscal condition/debt, strength of process and procedure or employees). You can change strengths and weakness over time, but not without some work. Opportunities and threats are mostly external facing factors (consider vendors and suppliers, competitors, prices, demographics, road construction, other industries, new technologies or equipment). They are out there in the marketplace or industry, happening whether you like it or not. You can’t always change them but you can affect how, when or if they impact your business.
The mechanics of the SWOT analysis drill are rather simple and do not require fancy forms, programs or apps. Although there are many online resources for drills and downloadable formats and examples, I prefer to use a basic Word doc or the “timeless” blank sheet of paper. Simply divide the sheet into four sections or quadrants labeling each successively as Strengths, Weakness, Opportunities and Threats. Please consider the following questions you could ask yourself as thought starters when considering each area of your SWOT analysis. This is by no means the only questions you might consider, but rather just thought starters:
Strengths (internal, positive factors)
Strengths describe the positive attributes, tangible and intangible, internal to your business. They are within your control and they enhance your ability to deliver service.
- What do you do well?
- What internal resources do you have?
- Positive attributes of your team members such as: knowledge, experience, background, education, certifications, reputation, motivations, mentorships or specialties.
- Tangible assets of your business such as capital, credit, existing customers, specialties or culture
- What advantages do you have over your competition?
- Do you have strong technical resources or employee training and development capabilities?
- What other positive aspects, internal to your business, add value or offer you a competitive advantage?
Weaknesses (internal, negative factors)
Weaknesses are aspects of your business that detract from the value you offer or place you at a competitive disadvantage. You need to enhance these areas in order to compete with your best competitor.
- What factors detract from your ability to obtain or maintain a competitive edge?
- What areas need improvement to accomplish your objectives or compete with your strongest competitor?
- What does your business lack (qualified employees, candidates, expertise, access to skills or technology)?
- Does your business have limited resources? Do you lack tools or equipment
- Is your business in a poor location?
- Do you have a strong marketing platform and plan?
Opportunities (external, positive factors)
Opportunities are external attractive factors that might exploit, adopt or take advantage of that would add to your success or provide a competitive advantage.
- What opportunities exist in your market or the environment that you can benefit from?
- Is the perception of your business positive?
- Has there been recent market growth or have there been other changes in the market that create an opportunity? Is the opportunity ongoing, or is there just a window for it? In other words, how critical is your timing?
- Are there additional markets, specialties or products you could move into to enhance your business stability or base?
- Are there opportunities to expand or to open additional locations?
Threats (external, negative factors)
Threats include external factors beyond your control that could place your strategy, or the business itself, at risk. You may not have control over these, but you may benefit by having contingency plans to address them if they should occur.
- Who are your existing or potential competitors?
- What factors beyond your control could place your business at risk?
- Are there challenges created by an unfavorable trend or development that may lead to deteriorating revenues or profits?
- What situations might threaten your marketing efforts?
- Has there been a significant change in supplier prices or the availability of parts or supplies?
- What about shifts in consumer behavior, the economy, or government regulations that could reduce your sales?
- Has a new product or technology been introduced that makes your products or services obsolete?
I find the analysis a valuable first step resource in creating an operational plan and goals. Honestly, the drill is a lot more fun than it might sound. It forces you to think about your business in a whole new way.
Please keep your eyes out for our next installment on creating a comprehensive business plan for growth. We will be discussing the WIN Number drill, which helps you map out your entire model for the growth you want.
