S.W.O.T. Analysis — if you invest the time in evaluating your business model at key intervals you can ensure that your firm not only survives but thrives...

Happy New Decade and Year to our Los Angeles Caribbean-American Family!  I urge you to take this opportunity to wipe the slate clean and begin again; of course, only if you feel the need to recast your business and financial sails.

The close of 2009 not only represented the end of a year, but also the end of the first decade of the 21^st Century.  For me this provides a great opportunity to not only evaluate my annual goals, but to also to reflect and recast those longer term goals.  Thinking in terms of a decade or more allows you to consider where your ship is headed.  In this column I speak in terms of your business focus, however, this is a great time to consider your legacy as well.

As we evaluate the business landscape, we are still facing a turbulent economic business cycle, political conflicts, regulatory issues, terrorist threats, along with global market competition.  Many entrepreneurs are so focused on the day-to-day issues, that it often seems like a luxury to take time away from the business and work on the strategic plan.  However, I urge you to take that time away.  Truly strategic planning is an essential investment in the viability of your business venture.  Remember the old adage “you can’t see the forest for the trees.”   In business this can often become your reality, you begin operating from one crisis to the next, without taking a step back to gain a different perspective.  The beginning of a New Year or fiscal period allows you an opportunity for such reflection.  I suggest that you take time to focus on each functional element of your business.

Here are some key questions to consider: Where is your business headed?  Are you competing in a market that is growing or declining?  Are there other factors changing the competitive landscape [e.g., regulatory issues, technological advancements, other]?  What are your customers saying about your firm?  Have you asked?  What tools or resources are required to further the sustainability of your business venture?  How are you allocating the resources controlled by your firm?  Is there an opportunity to reallocate resources in another area?  Can you improve on your product/service quality?  How can you increase profits, while improving product/service quality?  Are you communicating effectively with your market?  Are there key market dynamics impacting the future of your firm?

I know this might seem like a lengthy list of questions to consider, however, I promise if you invest the time in evaluating your business model at key intervals, you can ensure that your firm not only survives, but thrives.

In practice this type of evaluation is performed and organized as a S.W.O.T. Analysis.  I add another S. to the traditional S.W.O.T.   The acronym represents: S= Situation – Current internal and external view of the business landscape.  This section is described as if you are sharing a snapshot of the right now conditions of your business.  The next S = Strengths – Internal strengths of your organization.  Here is where you consider the superior product/service, technologies, and other core competencies which give your firm internal strength.  Next is W= Weaknesses – Internal weaknesses which may prevent you from accomplishing a particular business goal or objective.  For example, your information systems provide the solid back bone to your operating infrastructure, yet you have not been able to invest in new technological advances or improvements.  Consequently, your systems are nearing the end of their functional lifespan.  This will require additional resource investments to resolve.

Following the internal view of your venture, you must next look to the external market.  This begins with the O = Opportunities – External market opportunities that can be of benefit to your firm.  For example, you have a great restaurant in an area recently benefiting from redevelopment efforts, which have allowed for an increase in adjacent residents.  These new residents provide an opportunity for increased consumers.  The last consideration is the T= Threats – These are external threats to the sustainability of your venture.  One such concern has been the debates regarding the overhaul of the health care system.  The opposition has stated that this overhaul will impact small businesses negatively; while the proponents have suggested that this overhaul will aid the small firms by reducing health care costs.  Until the legislative process is completed the true financial impacts are still unknown, however, if the overhaul results in increased health care costs this will negatively impact the allocations of resources controlled by business owners.

Once you have completed this S.S.W.O.T. Analysis you will have a better view of your business model, and an ability to determine if you are following the correct path towards your destiny or if you should make mid-course corrections.

Over this next year, I hope to continue to equip you with tools and information essential to building a sustainable business venture.  It is very helpful to me when I receive emails from you with specific questions, as often times these questions are shared by many.

For the last six months of 2009, I specifically focused on financing issues – debt and equity capital for small firms.  I am certain that many small firms are still facing a tough financial climate.  I will continue to bring information and tools specific to this area of business development as well.

Remember, if you have specific questions regarding raising capital, equity and debt financing, or other business management issues, please send me an email.