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Become a Member of the SWOT Team

SWOT analysis is one of the easiest but most powerful things you'll do in your business planning process. In essence, you can use it to bring together all of the research you will do as part of your situation analysis. Once you know all you can about your markets, competitors, industry, and the broader economic environment, you'll be able to complete a SWOT analysis that will lead you straight into goal setting.

SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis includes internal and external (to the business) assessments. Strengths and weaknesses relate to those things internal to the business. To begin to define your goals and objectives, you have to completely understand your business's strong points and its weak points. Be realistic! Don't over- or under-estimate yourself. If you do, you'll regret it as you implement your business plan.

Opportunities and threats exist outside of your business. Your market analysis may show that no one with your product is serving a nearby region, although the population there would love to have your product. Your assessment of the environment may show that the milk price is expected to fall dramatically. This will threaten your custom heifer growing business because the lower prices might squeeze some of your dairy farmer clients out of business.

To begin the SWOT analysis, brainstorm items, placing them into one, and only one, of the four categories. Once you've done a SWOT analysis, you'll see that it's sometimes not easy to put some items into only one category. For instance, it's common to place an item like "we have 25 years of experience in this industry" into both the strength and weakness categories. It's a strength because you have specialized knowledge and expertise. Some may view it as a weakness because it may mean that you have pre-conceived notions of how things ought to be. Our suggestion is to do yourself a favor and try to be unambiguous. If your strength really is the specialized knowledge and experience, then write that down rather than your years of experience. On the other hand, point out that you are weak on creativity or seeking new options for addressing issues if that's truly the issue. This is more direct than having to explain to someone why a long career in a given field may hurt you if your plan is to remain in that field.

As you identify your strengths, weaknesses, opportunities, and threats, find an arrangement or organizational method that works best for you. You may try using a table, separate sheets of paper, or a word processing document to help you keep track of your SWOT analysis. Just be sure to identify them and categorize them properly. Then, you may begin to establish goals to take advantage of strengths and opportunities while addressing weaknesses and threats. Remember, the situation analysis is designed to help you know all you can about your business and the environment in which it operates. The SWOT analysis, specifically, provides an easy way to summarize your new-found knowledge and then use it to move forward in the planning process.