In analyzing your business concept and the marketplace, you must consider your strengths, weaknesses, opportunities, and threats — commonly called SWOT analysis. It is a strategic planning tool for analyzing business ventures. It is a useful tool that can help you develop your consulting business.
In business analysis, a strength is an internal attribute that will help achieve an objective. These are the good things about your business. These are the attributes that make it stronger than the competition. Strengths for a business can include:
Brand: established, recognized
Competition: knowledge, assets
Costs: inventory, employees
Creativity: new products, services
Employees: knowledgeable, credentialed
Resources: location, financial
Your business plan offers a good opportunity for you to list the specific strengths of your venture. What brand, competitive, cost, creativity, employee, and resource strengths does your business venture have? Listing them will help you analyze your business.
A weakness is an internal attribute that can be harmful to a business's objective. To identify weaknesses, consider the same categories you reviewed for strengths. Is your business name or primary brand unrecognized? Is the competition strong? Will your costs of inventory and employees make it difficult to be profitable?
It may be easier to identify business strengths than weaknesses, but you must make the effort. Your competitors will be analyzing them carefully in order to retain or grow their market share. Look at your business concept as your competitors will. Focus on the internal weaknesses and analyze how you can overcome them. Be proactive.
The SWOT system of market analysis was developed by Albert Humphrey of the Stanford Research Institute while studying the success of Fortune 500 companies in the 1960s. Humphrey's system has since been taught by all major business schools as a method of analyzing and comparing business and competitive marketing. It has also been successfully applied to other business departments.
An opportunity is an external condition that can help a business meet its objectives. What unique opportunities does your business or the current marketplace offer? The following are common market opportunities:
Competitor: downsizing or redirection
Economic changes: growth, recession
Environment: enhancements, reductions
Global influences: availability, costs
Perceptions: popularity, increased need
Technology: greater features, lower cost
These and other opportunities can offer your business openings to start or grow. The reduced cost of a technology that your business depends on can give your venture a pricing advantage.
A threat is an outside condition that may be harmful to a business's objectives. Each of the market opportunities available can become a threat to your business venture. For example, your competitor may be poised to expand operations or focus its business more on the clients that you hope to serve. The local perception of your business location may be a negative if the neighborhood is declining. You need to analyze and address this issue.
Developing a SWOT analysis for your consulting business will guide you in defining a target market as well as establishing an effective marketing strategy.