Mark Edwards, general manager at www.rocketlawyer.co.uk, brings you this essential guide to creating the perfect business plan during your lunch break. Follow the six-part series exclusively online each week at www.talkbusinessmagazine.co.uk.
Step 6 – The SWOT analysis
The SWOT analysis
This is an optional part of a business plan but can prove a valuable addition as a SWOT analysis increases your business awareness, helping you to capitalise on your advantages whilst pro-actively tackling any potential issues. Detailing this to your investors demonstrates the grasp you have on your business, the industry it operates in and an awareness of your competitors so you know what you’re up against. This should help give investors confidence in your ability to navigate your way through the market based on sound research and calculated actions. Examining your business and the sector in which it operates is intrinsically valuable as it helps you to make strategic decisions and prevent disasters by planning ahead.
The SWOT analysis is split into four sections – Strengths, Weaknesses, Opportunities and Threats – with each one detailing the various relevant attributes and downsides to your business and the industry. They are sometimes represented visually in the form of a matrix. Brainstorming is often a good way to begin a SWOT analysis; simply jot down any observations or ideas which come to mind and flesh them out or edit them later. Now for the SWOT itself:
This is where you can highlight the qualities of your particular business, whether it’s the skill set, industry knowledge or a specialist resource. This is where your list of USPs will come in handy.
Do you have any specific intellectual property rights? Have you secured a retail space with a particular high footfall? Perhaps you have acquired sole rights to sell a product in a particular region. Whatever gives you a head start in the marketplace can be considered a strength.
Think about the advantages of your business compared to your key competitors. If you’re able to sell a product at a reduced cost due to lower overheads – or can provide a higher quality service for the same price – this will automatically put you at an advantage.
If your business lacks certain skills (e.g. in the form of an effective sales person or a technical expert) you’ll need to find a way of overcoming this, possibly by using external contractors.
You should also specify how you plan to deal with any other lack of resources (e.g. specialist machinery), as well as addressing any weaknesses compared to your competitors.
In this section, you can make a general case as to why your business will succeed in a certain market (e.g. umbrellas in rainy England) as well as detailing any specific opportunities (e.g. umbrellas which tap into a fashion trend) and the possibility to claim a niche position (e.g. a reputation for durable umbrellas).
Try and be frank about any potential reasons your business may not succeed, particularly in light of existing or possible future market conditions but to counter that, remember to detail your contingency plans.
That concludes our 6-part series on how to create a business plan in your lunch break and now you should be perfectly placed to get the funding you’re after to make your business dream a reality! To view the previous steps, visit the “Strategy” section of our website.