Conduct a SWOT analysis for your new business. You could use the SWOT template but don’t feel constrained by it.
Try to rank your statements in each quadrant. Which are the most important? Avoid saying ‘they all are’. Really understand them and work out which ones are the most important – which ones put you ahead of competitors.
Euan’s SWOT analysis looked like this…
Strengths
Weaknesses
Opportunities
Threats
Anyone reading your SWOT analysis will be able to gather a good picture of the position of your company at a particular point in time.
If we go one step further and look at how all the statements work together, we can see that Euan has identified one of his major strengths (family owning the farm buildings) with a weakness (need to change the official use of some of the buildings). Similarly he has a family who are supportive but who may need training to work on the new income strand, in addition to their current workload. He will also be looking at the lifestyle he and his family want to live as well as the business. (Remember how we saw in the introduction that rural companies have a healthy outlook on work/life balance!) This is frequently an issue for family firms, and the business owner has to balance the economics of hiring staff against the risk of heavy dependence on the family. This is, however, a risk for any company with small numbers of staff. The business owner might consider writing down the processes followed in the business such that:
It is vital to keep referring to the SWOT analysis when you develop your strategies and plans. When completed thoroughly it will help inform you of resource constraints (and surpluses) and help you to see issues that must be dealt with before embarking on the next part of your strategy.
Gwyneth might have noted that her car was coming towards the end of its useful life (weakness). Therefore she needs to sort that out before embarking on a plan to expand by taking on delivery rounds further afield (opportunity) alongside using the bigger family estate car (which her partner uses for work on weekdays) for weekend farmers markets.
She might be concerned about a new company that is expanding into the area (threat). She knows her feedback from customers on her service and products is great (strength) so she can start to look at how to build up loyalty around that in order to protect her against the competition.
Broadly speaking look to your strengths to defend you against a threat.
Use your strengths to capitalise on the opportunities as they give you a real advantage.
Your weaknesses must be dealt with swiftly to protect you from any specific threats, as otherwise you will have a serious disadvantage.
Avoid being tempted to go for opportunities when you are exposed by weaknesses. Sort them out first.
Remember, the purpose is to seek a competitive advantage for your company that will be sustainable over time.
Bruce Henderson (founder of the Boston Consulting Group) has said. ‘Your most dangerous competitors are those that are most like you. The differences between you and your competitors are the basis for your advantage.’ In reality, most successful competitive advantages come from a mix of things. How they all work together makes the total unique and very hard for a competitor to copy.
Revisit your strategy you devised in Task 13 now that you have completed your SWOT. Is there anything you want to revise? Does this confirm your earlier thoughts?
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