Evaluating your strengths, weaknesses, opportunities and threats
Previously, we looked at some of the basic parts of creating a simple business plan (researching the market and determining who your customers are). Another important element, however, of your plan should be evaluating your strengths, weaknesses, opportunities and threats. This process is called SWOT (Strengths, Weaknesses, Opportunities and Threats). And it’s not as complicated as it might sound.
Years ago, the Bramble Berry team and I did this by drawing bubbles on a huge graph to determine the things we were good at, and bad at, when compared to our fellow vendors. It wasn’t a pretty piece of art but it was functional. At that time, the major weakness we identified was our cash flow. We had made some pretty large investments (purchased our warehouse and opened Otion in the same month – whoops!) which meant we didn’t have any cash for expansion of any sort. If you’ve heard the phrase ‘cash is king’ then you know that being out of cash was a problem. For three years, we were unable to develop major new product lines because we didn’t have the finances to do so. This meant that trying to stay afloat amongst fellow suppliers who did have the financing to expand their product lines. It was tough but thankfully, our committment to customer service and our loyal customer base continued to support us, even though we didn’t have a big essential oils line or a line of candle products. Doing a SWOT helped us to identify our problem areas and address them before it was too late.
Here’s how you might do your own SWOT:
§Your strength could be your size. Since you are small, you might be more agile and more flexible than some competitors. Or, your strength might be your proximity to a retailer which means you are able to react quickly when they need something.
§Your weakness could be that you have very little time available. Or even no time at all! What skills are you missing to make your business successful?
§Your opportunity could be the teenage daughter or son of yours who really wants a job. Or a growing market. Or identifying flanker products for your line.
§And, your threat could be the brand new line of Bath & Body Works soaps that your customer base seems particularly enamored with or a particularly successful local vendor selling in your niche.
Doing a SWOT like this to identify weaknesses and threats around you will help you to spot trouble early on. When you know the dangers, you can then use your strengths and opportunities to help mitigate them. If, for example, if an established, larger line like the creative and colorful Primal Elements soaps (side note: they started small, in their kitchen, just like all of you) shows up in your main retail client’s store, your proximity to that small store could work to your advantage by allowing you to more easily communicate with the store. Also, when you learn of the store’s new needs, you can probably move more quickly to accommodate them than a larger company. Likewise, while you may not have much spare time, you might be able to capitalize on that teenager of yours who needs some work to offload some of your tasks.
Formulating a simple business plan will help you make a solid foundation for growth. You have already put down on paper as much information as you could about your customers, your competitors and researched the industry. Now it’s time to work on your unique value proposition and your SWOT. Identifying these elements will give you a good foundation to work with – or, as in the process of soap-making, it will give your base. It will give you a much clearer understanding of where your business stands now and will help you decide where you want to go next. And, it really is very easy – just grab a notepad and spend some quiet time thinking through these points.
Your Homework for tonight is to get a basic SWOT template here. Print it. Spend a minimum of 20 minutes thinking about and fill it in or free form your answers as a long essay. Then, spend a minimum 10 minutes thinking about your Unique Value Proposition. What sets you apart from others? Write this all down and add it to your customer description notes.
Once you have this base, it is then very easy to add in your own ‘special mix of ingredients’. And just as you get to use your creative imagination in adding in oils, fragrances and colors to your soaps, you also get to have some fun in spicing up your ‘business base’ with your own special mix of vision and values which we’ll cover in the next part of this ‘Kickstart your Business in ’09’ series.
Looking for another part in the “Kickstart Your Business” series?