Using a SWOT Analysis with your Business Plan

When investors are reading your business plan, they want to see an accurate representation of what your company has to offer and how it might be vulnerable. A comprehensive business plan will clearly outline their investment possibilities and risks. You can effectively provide this information by using a SWOT analysis in your business plan.

The SWOT Analysis is a classic business method for analyzing a company. SWOT stands for strengths, weaknesses, opportunities, and threats. The strengths and weaknesses section is an internal analysis of the company, while the opportunities and threats section deals with the industry and market in which your company operates.

Begin your SWOT analysis by listing the strengths of your company. Your company strengths are the things that you do or have which give you an advantage over your competitors. Perhaps you have been in the market longer so you have a head start on the competition. You might have a patent that protects your products from being duplicated. List all the strengths of your company. When you write the analysis, you will also want to include why they are strengths.

The second section of the SWOT analysis is a list of your company's weaknesses. Be honest in your assessment, but also include things you are doing to either minimize the impact of these weaknesses or make the weakness a strength. Since this section is part of the internal analysis, these items should all be things you can control. For example, a weakness might be that your product line is not as developed as the competition. Another might be that you do not have access to technology that would benefit your company.

After you have completed your internal analysis, you should begin an analysis of the external forces on your company. Analyze the opportunities that are in the market, and ask yourself if there an area that is underserved that could be a new niche market. Look at changes happening in the industry and find opportunities for your business in these changes.

The last section in the SWOT analysis is the threats to your company. These are market forces that could hurt you that you cannot directly control. Is government regulation a problem in your industry? Maybe there is a new competitor that is posed to take a chunk of your market share. Your business plan should include the company's plans for addressing these threats if they become a problem.

Once you have completed your SWOT analysis, you have created an important tool for your business. This analysis can be very helpful in determining the strategic direction of your business. Using a SWOT analysis in your business plan is an easy way to address many of the questions that investors will ask.

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