How I Will Be Rich

Since the beginning of this blog, Matt and I have been swimming with ideas for future business plans and directions we would like to travel. By starting and writing this blog, we have been given an opportunity to discuss some of the ideas we’ve had while considering various strategies to achieve them. Matt has written posts How to start a Business in California (Pt.1) and (Pt.2) that have showed the preliminary steps that we have been starting to take. These posts only show the tiniest pieces of the pie that’ll need to be taken care of while starting a business. These are very important and necessary steps to complete, but an equally required point to cover is the planning and strategic side of the equation.

A vital tool to figuring out the strategic side of any business idea is knowing and understanding the acronym: SWOT. First, after fully planning and figuring out what will go into your business idea on paper, the next step is to analyze the company’s SWOT. While going through this process you’ll be able to focus on the strengths and realize weaknesses early so the business plan can be amended. With this well-rounded business plan and a completely understood approach, you’ll be able to safely move towards getting the ball rolling.

The acronym SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This is an analysis of the business plan that covers both internal and external factors. By using this tool, you’ll be able to see the pros and cons before even putting any money into a project.

The Strengths and Weaknesses categories are both internal factors. These are pretty self-explanatory, but they are the aspects of your business that you would be directly in control of. Some of these would include the proper management of staff, managing cash flow, knowing the company’s capacity of supply and demand, and the overall efficiency of your operations.

The Opportunities and Threats portion are external factors. These two are influences outside of your control and are normally external environmental factors. By pointing out these aspects of the business, you’ll be able to try and cradle the Opportunities to make the most of them and, hopefully, avoid the Threats before they occur. A few examples of these are changes in the economy, new technologies, outsourcing, industry/customer needs, and weather issues.

All in all, after using the SWOT analysis on your business plan, you’ll have a much better understanding before contributing a large start-up financial investment.

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