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A key feature of a SWOT Analysis and Action Plan is to show how you will take advantage of opportunities and strengths, overcome weaknesses and head off threats.
The SWOT analysis should be included in your business plan together with financial, marketing, distribution, operational and administrative issues that will ultimately make the overall business operate successfully.
Having previously carried out the Feasibility Study of your business, “IF” it shows that the business venture is destined to be financially feasible, you can continue moving forward by creating a SWOT Analysis and Action Plan.
The aim is to develop a more complete business plan that includes tactics and strategies in order to take the business to the next level.
KEY COMPONENTS OF SWOT ANALYSIS
Strengths:
Competitive advantage is that special edge that allows a business to deal with the market and other external factors better than its competitors. Example include:
- Excellent product/service or product/service concept
- Skilled work force
- Strong reputation/brand in the market
- Quality of service
- Management skills
- Market share
- Strong financial position
If you are not operating your business yet and you are in the planning stage, your strengths might include:
- Previous business skills
- Strong analytical skills
- Excellent knowledge of financial management
- Excellent knowledge of, or profile in the market
Weaknesses:
A clear understanding of weaknesses within your business will help to form a realistic response to overcoming them. Examples include:
- Undercapitalisation/constantly needing funds
- Outdated facilities, equipment or technology
- An unstable work force
- Poor customer relations
If you are starting a new business, your weaknesses might include:
- Lack of management skills
- Lack of business knowledge
- Insufficient exposure to the management of financials
- Insufficient exposure to managing quality and suppliers
Opportunities:
External forces can change rapidly and management needs to be vigilant and respond quickly. Profitable opportunities may be available to your business through:
- New and changing customer needs
- Changing economic factors
- New technologies
- Development of new products, services or territories
- Government policies
- Other factors, such as legal issues
Threats:
You will need to consider your response to the following:
- Changes in customer preferences and buying behaviour
- Actions taken by competitors, including:
. pricing
. promotions
. special offers and discounting
. strategic alliances (business co-ownership that creates businesses through co-operation of
Two or more firms)
- Changes in lease conditions, etc.
- Shortages of resources such as materials, skilled staff, etc.
- Developments in technology
- Legal issues:
. contract law
. legislation (national and state)
The 3×3 table below lets you see the relationship between the current internal features of your business and the future external features with which you meet challenges, grow and develop your business.
The SWOT Action Plan will help you determine if you have the right skills needed to make your business work.
The four boxes marked 1,2,3,and 4 have crucial (and yet different) actions that will determine how successful your business can and will be.
SWOT Analysis Action Plan Table
| SWOT ACTION PLAN | OPPORTUNITIES 1…………… 2…………… 3…………… 4……………. 5…………… 6…………… | THREATS 1…………… 2…………… 3…………… 4…………… 5…………… 6…………… |
| STRENGTHS 1………………. 2……………… 3………………. 4……………… 5……………… 6……………… | 1- Actions to do immediately And positively now! | 2- Play to strengths But do it differently |
| WEAKNESSES 1………………. 2……………… 3………………. 4……………… 5……………… 6……………… | 3- Proceed with caution But address weaknesses | 4- Do or Die: must act or else! |
