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SWOT Analysis For Entrepreneurs, In Guideline Format
For the fun of it, I drew up this SWOT analysis guideline. It's very much the usual comparison of Strengths, Weakness, Opportunities and Threats, but instead of examining a specific business idea, this SWOT analysis assesses both the business plan and the entrepreneur. As in, other than business advantages, does you also have the personal qualities required for entrepreneurship success? To encourage objective examination, I've phrased everything into questions. One just needs to answer frankly. If you're considering a start-up, might I encourage you to go through these questions. You would gain some insight into whether you are ready to be on your own.
Important notes about this SWOT Analysis
I’m merged two SWOTs here; one that examines the overall business idea, and another one that reviews the potential for entrepreneurship. I acknowledge that this might muddle things. However, most if not all new businesses readily blur the line between work and personal in early days. I’ve also seen way too many new businesses fold because of some unconsidered personal trait of the owner. This, in spite of the start-up having a strong market advantage.
An understated flaw of SWOT analysis is its inclination towards numbers. For example, if you have ten strengths but only five weaknesses, does it imply your analysis is skewed? Or is it an immediate indication of your plan being a winner? For this guideline, I’m aiming to be as expansive as possible. There is however NO stipulation that all questions must be answered. You also shouldn't be too concerned about having too many strengths or weakness or otherwise. The important thing is to understand the implication.
Lastly, and I admit I was guilty of it as a student, the inability to differentiate between Strengths and Opportunities, and between Weaknesses and Threats, is a huge obstacle in SWOT analysis. Very simply, Ss and Ts i.e. the upper quadrants refer to the “Self.” That being the plan or the idea in discussion. The lower quadrants refer to external factors. In other words, the lower quadrants are also the factors that the entrepreneur have little or no influence over.
Are you ready for business, entrepreneur?
- Does your business enjoy a competitive advantage over industry competitors?
- Does your business possess a sustainable competitive advantage over industry competitors?
- Do you have the relevant knowledge or skills to aptly manage your business?
- Do you have the funds, or access to funds, to weather the initial low-revenue period of new businesses?
- Are you able to attract ideal manpower for your business?
- Do you have competitive access to external parties necessary for your business to operate, i.e. suppliers?
- Do you have access to technology that would enhance your business?
- Do you have both reliable AND continuous data inflow for your business to develop upon, i.e. customer demographics, industry trends, etc
- Can you benefit from the advantages of new businesses? For example, flexibility.
- What personal trait of yours would enhance your business?
- Do you have the contacts to fuel AND grow your business?
- What personal trait of yours would make you an appealing leader?
Summary: Strengths are the weapons you have on hand to sharpen your business edge. They are also the weapons you are able to utilise. Potential advantages arising from favourable circumstances in the future are not strengths. These are vague opportunities at best. It is important to know the difference.
- If you are venturing on borrowed funds, what burdens would that impose on your business overall?
- Are you affected by any industry barriers of entry? Legitimately or not?
- What competitive disadvantages would your business suffer from?
- Is your business model aligned with the current economic or industry climate?
- Do you need to rely on others to run your business, be it technically, for marketing, or for daily operations?
- Are you able to secure appropriate manpower quickly and cost effectively?
- Are you able to manage your cost-of-sale efficiently?
- Are you severely limited by the disadvantages of new businesses? For example, lack of portfolio.
- Are you personally able to devote the kind of hours and attention necessary to sustain a new business for at least three years?
- Are you ready to forgo your personal part-times, passions, recreations, in order to devote your best effort to your new business?
- Do you have any existing financial obligation that would weaken your ability to weather a period of low or no income?
- What personal trait of yours would make you an unappealing leader?
- Is your health up to the stress of being a business owner?
Summary: Weaknesses are the inherent shortcomings of your business model and methodology, or of yourself. Realistically, it is impossible to be completely free of weaknesses and frankly I am very sceptical towards business plans that have a "remedy" for every weakness. My personal opinion is that the crux should be on acknowledging weaknesses and knowing how to contain their damage. Obviously, downplaying weaknesses helps in no way at all.
- What are the economic or industry trends that would benefit your business?
- Are there any schemes, grants or loans that your business can benefit from?
- What sort of business synergy could you achieve with other businesses? Both competitors and suppliers?
- What developing social trends could your intended business benefit from?
- Are there any manpower talents or technological benefits that you could exploit?
- Are there any significant reasons for your targeted clientele to switch to using you?
- Are there any industry gaps for you to fill?
- Are there other-parties seeking to partner or invest into your intended business?
- Do you possess any personal credentials or experience that might attract business cooperation?
- Are your existing social circles beneficial to your aspirations to be an entrepreneur? As in, friends who would readily buy from you.
- Is the current socio-political environment beneficial to your aspirations to be an entrepreneur?
Summary: Opportunities are the empowerments offered to you by the environment you choose to operate in. By that definition itself, it is implied that opportunities are neutral and available to everybody. Because of that, it is detrimental to consider opportunities as business strengths. Just because the pie is there doesn't mean you will eat it. Or get to eat it alone. This brutal reality is something often overlooked by users of SWOT analysis.
- What are the industry regulations that would affect your business negatively?
- What are the industry limitations that would affect your business negatively? For example, manpower, resources, or technology.
- Are there any public or industry perceptions that might hamper your business growth?
- What are the possible retaliations that competitors might inflict on you?
- How easy is it for your staff to be poached?
- Are there any projected industry downturns that could severely impact your business?
- Are there any technical developments that might severely impact your business?
- Do you have any personal commitments that might compete with your business for your time and attention?
- Are your existing social circles detrimental to your aspirations to be an entrepreneur? For example, friends already operating a similar setup.
- Is your current socio-political environment detrimental to your aspirations to be an entrepreneur?
Summary: Threats are the dangers arising from the environment you choose to operate in. Threats are very much outside of anybody's control, and you shouldn't lose too much sleep over them. The important thing is to anticipate their occurrences, and have ready strategy to limit harm when they do happen.