Saturday, 14 June 2008
Assessing Your Business
Sorry for not writing for the last couple of days but I have been very busy spending most of my time in mid year reviews with the different parts of the business, last week was the national sales meeting, this week was with the operations and financial teams. During the midyear reviews, each part of the business had prepared a SWOT analysis which allows me to see at a glance where we need to prioritise our efforts and helps us with our strategic planning.
I have already mentioned in one of my previous posts that I have total respect for those who look to start a logistics company in this day and age, so considering that it is generally accepted that around half of new businesses have packed up within the first three years, usually for reasons ranging from poor financial planning to weak market research and lack of a growth strategy.
But weaknesses such as these can be damaging to a business at any stage of its development - particularly when market conditions change and businesses need to adapt to survive. Knowing your weak points is crucial to developing a robust business. But how do you work out what they are? I believe that a SWOT analysis is perhaps the best way to identify issues you need to address systematically but remember that this is not the only tool you can use to help you and by just completing a SWOT will not ensure you have carried out an adequate job, you need to ensure you still continue to do the sensible things such as define the companies objectives or calculating ROI for alternate strategies.
SWOT stands for (S)trengths, (W)eaknesses, (O)pportunities and (T)hreats. Conducting a SWOT analysis involves creating a list of each for different aspects of your business; then considering what you need to change in order to make your business stronger. In general, strengths and weaknesses would apply to the way you run your business - your administrative systems, your workplace policies, your premises, your financial processes, staff, sales channels, and so on. Under opportunities and threats, you are more likely to look at external factors that affect your business - your competitors, your customers' expectations, regulatory changes, and so forth.
Start by assessing your business plan and then use that as the basis for a more detailed analysis. Does your plan cover the key areas of your business? It should contain information about your offer, your marketplace, marketing and sales strategies, management team, operations, financial forecasts and growth strategy.
Does this information realistically reflect where your business is and where it's heading? Now look at each area in more detail and list strengths, weaknesses, opportunities and threats as appropriate. In particular, it's worth noting the areas where small businesses most commonly fall down:
Selling a product for which there is no demand
Paying bills promptly, but allowing customers to pay late
Planning based on unachievable sales targets
No growth strategy
Ignoring competitors
Poor recruitment and staff management
Unfavorable contracts with suppliers, landlords, etc.
A SWOT analysis is a tool for change, not an end in itself. Once you have identified the vulnerable areas of your business, prioritise them and develop plans for dealing with them. Note these in your business plan if necessary. Ideally, you should carry out a SWOT analysis fairly regularly, I also think that it is more effective if combined with a PEST, which I will explain more about at a later date, it is also important to remember that you don't have to do it yourself, but can delegate the exercise to employees.
Even if you don't look at every aspect of your firm, a SWOT analysis will help you keep in touch with your operation and your marketplace, and give you a greater chance to adapt and prosper when confronted with challenges and new opportunities.
If you are interested in finding out more about analyses tools such as SWOT, PEST or SCAN, there are some good articles in www.iod.com or http://en.wikipedia.org/wiki/SWOT_analysis
I have already mentioned in one of my previous posts that I have total respect for those who look to start a logistics company in this day and age, so considering that it is generally accepted that around half of new businesses have packed up within the first three years, usually for reasons ranging from poor financial planning to weak market research and lack of a growth strategy.
But weaknesses such as these can be damaging to a business at any stage of its development - particularly when market conditions change and businesses need to adapt to survive. Knowing your weak points is crucial to developing a robust business. But how do you work out what they are? I believe that a SWOT analysis is perhaps the best way to identify issues you need to address systematically but remember that this is not the only tool you can use to help you and by just completing a SWOT will not ensure you have carried out an adequate job, you need to ensure you still continue to do the sensible things such as define the companies objectives or calculating ROI for alternate strategies.
SWOT stands for (S)trengths, (W)eaknesses, (O)pportunities and (T)hreats. Conducting a SWOT analysis involves creating a list of each for different aspects of your business; then considering what you need to change in order to make your business stronger. In general, strengths and weaknesses would apply to the way you run your business - your administrative systems, your workplace policies, your premises, your financial processes, staff, sales channels, and so on. Under opportunities and threats, you are more likely to look at external factors that affect your business - your competitors, your customers' expectations, regulatory changes, and so forth.
Start by assessing your business plan and then use that as the basis for a more detailed analysis. Does your plan cover the key areas of your business? It should contain information about your offer, your marketplace, marketing and sales strategies, management team, operations, financial forecasts and growth strategy.
Does this information realistically reflect where your business is and where it's heading? Now look at each area in more detail and list strengths, weaknesses, opportunities and threats as appropriate. In particular, it's worth noting the areas where small businesses most commonly fall down:
Selling a product for which there is no demand
Paying bills promptly, but allowing customers to pay late
Planning based on unachievable sales targets
No growth strategy
Ignoring competitors
Poor recruitment and staff management
Unfavorable contracts with suppliers, landlords, etc.
A SWOT analysis is a tool for change, not an end in itself. Once you have identified the vulnerable areas of your business, prioritise them and develop plans for dealing with them. Note these in your business plan if necessary. Ideally, you should carry out a SWOT analysis fairly regularly, I also think that it is more effective if combined with a PEST, which I will explain more about at a later date, it is also important to remember that you don't have to do it yourself, but can delegate the exercise to employees.
Even if you don't look at every aspect of your firm, a SWOT analysis will help you keep in touch with your operation and your marketplace, and give you a greater chance to adapt and prosper when confronted with challenges and new opportunities.
If you are interested in finding out more about analyses tools such as SWOT, PEST or SCAN, there are some good articles in www.iod.com or http://en.wikipedia.org/wiki/SWOT_analysis
Labels: Economy, New businesses, Strategy
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