Preface: Proper preparation is always good advice. Are you preparing to excel? A SWOT analysis can help you achieve entrepreneurial success more easily with less stress.
SWOT Analysis for the Aspiring Entrepreneurs
Credits: Jake Dietz, CPA
Should I become an entrepreneur and start a business? If you are asking that question, then there are many things to consider. This article will not delve into all of them, but recommends that the aspiring entrepreneur conduct a personal SWOT analysis to examine Strengths, Weaknesses, Opportunities, and Threats.
First, strengths are your characteristics that can help you. Some strengths that you might possess include a good work ethic, discipline, integrity, experience, and good hand-eye coordination. What would give you a competitive advantage? What internal strengths would help you run this business successfully?
Along with your strengths, consider your weaknesses. Weaknesses are your characteristics that may harm you. It may be painful to recognize your own weaknesses, but it also may be extremely beneficial. If you know your weaknesses, then you may be able to avoid long-term harm by avoiding certain situations, or by minimizing your weaknesses in certain situations. For example, assume that you are terrified of heights and cannot work long hours in the heat without fainting. Perhaps you should not start a roofing business. On the other hand, sometimes a weakness can be mitigated. Maybe you are weak at analyzing financial data. If that is the case, then you may want to team up with a talented CPA who can assist you with the financial analytics.
Strengths and weaknesses are internal, so a good knowledge of yourself is crucial to understanding them. Unfortunately, it can be hard to truly know yourself and analyze yourself honestly. Consider asking one or more trusted people who know you well to help with the process.
In addition to analyzing your internal strengths and weakness, it is also valuable to consider external opportunities and threats. What are the opportunities in the industry? For example, suppose you want to become a residential homebuilder. An opportunity could be that your township revised its zoning laws to allow more houses to be built. Another opportunity could be a growing population of a certain demographic group that wants your product or service. For example, if you want to start a home healthcare business, then a growing population of senior citizens could be an opportunity.
A threat is an external item that could harm your potential venture. Threats may include legal, economic, and other hazards. For example, if you wanted to start a residential construction company right after a housing bubble popped then you may be facing a major threat.
Opportunities and threats are external to you, so they may require some outside research. Reading can be a great way to learn some of this information. Business publications, trade publications, and even your local newspaper can provide helpful information. Also, consider talking with your librarian. Your library may have access to business databases, publications, and references that will be useful to you. You also may want to talk with experienced people in the industry in which you are considering starting out as an entrepreneur. Do they know of any good opportunities to seize or threats to avoid?
The factors going into a decision about entrepreneurship may be many, but remember to include a SWOT analysis in the decision process. It might steer you away from a disastrous decision. Alternatively, you may still make the decision to enter that field but be better prepared to use your strengths to seize certain opportunities and to take measures to minimize the risks from weaknesses and threats. Feel free to contact your CPA if you would like to talk about becoming an entrepreneur.