As an entrepreneur, I’ve had the opportunity to be involved in several business ventures over the years; some successful, some at break-even and others total flops.
One of my B-school buddies and I were brainstorming a few business plan ideas the other day and we both agreed on the importance of the S.W.O.T analysis as an invaluable tool in determining the viability of a venture before proceeding.
S.W.O.T stands for Strength, Weakness, Opportunity and Threats. Strengths and Weaknesses focus on the internal aspects of running a company and look mainly at the past and present. Opportunities and threats focus on external factors, such as the economy, competition, distribution channels, market segments etc., and look toward what your company might do in the future.
Ideally the SWOT is used to create inputs that can be used to generate possible strategies. A broad range of perspectives should be included in the process. And the following questions should be answered many times:
1. How can we use each Strength?
2. How can we stop each Weakness?
3. How can we exploit each Opportunity?
4. How can we defend against each Threat?
This type of analysis allows to you to develop a clear and concise picture of your present situation as well as the future possibilities. In fact, lately I’ve been inclined to develop a SWOT framework that I could use to evaluate my own personal life.