Ever wondered why 95% of new businesses failed in the first 5 years? Most are because they did not plan properly. Some didn’t even have a plan in the first place! A good business plan will usually have elements of SWOT analysis.
SWOT stands for Strength, Weakness, Opportunities, Threats. It is a good technique to analyse the viability of a business when you are starting one, especially if you don’t have any experience. If you don’t have any experience in starting a business, don’t jump into it. This is a sure recipe for disaster.
Recently, a friend of mine decided to start not one, but two totally new business venture. His current computer hardware and accessory sales business has not even reach its first fiscal end of year yet, and he is already looking into starting a laundry franchise AND a fast food franchise.
The problem (Weakness!) is that he lacks experience with the two new venture whereas the bulk of his experience lies in IT sales. Now of course starting a new business that you don’t have experience in can somewhat be mitigated if you have a partner who is experienced (Opportunities). Unfortunately, my friend does not, and he is adamant on starting this venture alone (Threats). I wish him all the luck, I really hope he doesn’t become another statistic.
So how does one go about starting a business while utilizing their strength? First of all, what is your strength? If you have been programming for the last 5 years, you can start up a software company. If you have been cooking in the hotel kitchen, starting a restaurant will be a cinch since you can come up with the menu and cook it without poisoning your clientele.
If you are a programmer and want to open up a restaurant, your greatest weakness is knowing what to cook, and then to actually cook it perfectly without causing food poisoning. Of course you may have the opportunity to partner an experienced cook, although the threat of shutting down business looms if your partner decide to quit.
In fact, the previous paragraph is actually me doing a SWOT Analysis about a dream restaurant that I had always wanted to open. :)