Thursday, March 25, 2010

Knowing Your SWOT - Don't Do Business Without It!

Recently I and my SCORE colleagues were asked to give a presentation at Canton, MI IKEA in regards to utilizing the business tool SWOT and how it applies to starting a business. Of course I could not refuse this opportunity as I believe that SWOT is one of the single most powerful tools to utilize when you are considering venturing into the world of entrepreneurialism.
SWOT, which is an acronym for Strength, Weakness, Opportunity, and Threats, was developed by Albert Humphrey in the 1960’s and was originally used for strategic planning for a project or business venture to identify the internal and external factors that are favorable and unfavorable to achieving a specific objective or goal. Today it can be used in most anything related to personal or business goals and objectives. In fact, it was used by you, the readers of this article today, as you identified a weakness, a lack of knowledge about SWOT, you took advantage of the opportunity, reading this article, you identified a threat, not reading this article, and in turn you developed a strength, more knowledge about SWOT.



SWOT is a very simple tool to use. It is a quadrant based matrix tool in which for a particular subject matter, the upper left hand quadrant is used to identify your strengths, the upper right hand quadrant is used to identify your weaknesses, the lower left hand quadrant is used to identify your opportunities, and the lower right hand quadrant is used to identify your threats. The Strengths and Weaknesses are identified as items that are internal and controllable by you or your business and the Opportunities and Threats are those items identified as external and uncontrollable by you and your business. In addition, Strengths and Opportunities are positive and helpful identifiers and Weaknesses and Threats are identified as negative and hindering items.


Speaking in business terms, an example of business strengths would be a strong product brand name or market share. An example of weaknesses would be a low or no market share. An example of opportunities would be a growing market or increased consumer spending. And an example of a threat would be competitors of government policy.



Whether you are considering going into business for yourself or with a partner, you will need to conduct a SWOT analysis on yourself first before you conduct one on your business opportunity. You must know your personal Strengths, Weaknesses, Opportunities, and Threats before entering the world of entrepreneurialism. The purpose of this is to identify your weaknesses first and then take the opportunity to build your team and increase your “Circle of Influence” to add to your personal strengths. These influences may be Business Advisors, Legal Advisors, Financial Advisors, or a Sales & Marketing and Supporting Team among others. Once you build your team and you complete your personal SWOT, you will be in the position to develop your business plan and utilize a SWOT analysis to identify the Strengths, Weaknesses, Opportunities, and Threats of each section of the business plan as your move forward in your new venture as an entrepreneur.

Scott Ringlein is the Founder and CEO of PM Solutions Business Consulting, Owner of Ringlein’s Riverfront Resort http://ringleinsriverfrontresort.com/ and a Business Counselor for the Ann Arbor, MI and Chelsea, MI chapters of SCORE.