A SWOT (strengths, weaknesses, opportunities and threats) analysis is an excellent tool for reviewing your farm business.
It is a quick and easy tool to use.
In doing a SWOT, you review your current strengths, weaknesses, opportunities and threats in respect to achieving your desired outcomes.
This can provide some logical steps for thinking through your current situation and identifying any issues, goals, actions and priorities.
If you do the SWOT with other business partners, family and/or employees, it can be a great communication and planning tool.
Carrying out a SWOT
List the key objective(s) you are hoping to achieve. Then brainstorm your current situation against them, under each of the four categories listed below.
Firstly, look at factors that are internal to your business by reviewing your business strengths and weaknesses. Internal factors are things you can influence and control.
Strengths – what do you currently have going for you, in respect to achieving the outcomes you are after? What is it your business can do really well?
Weaknesses – what things about your current business situation that are going to limit your ability to achieve your desired outcomes? These will need to be addressed in order to better achieve the outcomes you are after.
You then look at factors that are external to your business, those that you may be able to influence, but cannot directly control, e.g. prices. The two external quadrants are opportunities and threats.
Opportunities – what things do you see as the current opportunities for your business? These are things you can take advantage of or invest in, to help you achieve your desired outcomes.
Threats – are there any threats that are not easily controllable and pose a risk to achieving your desired outcomes?
These will be things you will need to monitor for. They will include things like:
- Climate risk and associated factors (drought, floods, fire, etc.)
- Any particular trends in your industry (prices, commodity levels, customer demand, etc.)
- Health (sickness, injury or death of business members or employees)
- Market access and any key competitors
- The level of experience and knowledge in your business or available to it
- Pest and disease risks
- Factors in relation to your resources (soils, machinery, fences, storage, roads, yards, shedding, water sources, etc.)
Tips for getting the most out of a SWOT analysis
- As you review each of the four areas, focus on the main points that have clear evidence to support their inclusion. You will typically end up with 10 to 15 key points per quadrant.
- Involve all your business members and employees to get their perspective.
- Ask your customers and any key business advisers you use, what they see you are doing well (your strengths) and any areas they think you can improve upon (weaknesses).
- Don’t mix up weaknesses that are internal to the business with opportunities that are external, but addressing weaknesses is one way of improving your business. Opportunities are things that are controlled by factors external to the business that can be taken advantage of, e.g. commodity prices.
- Do your strengths offset any threats?
Setting goals and identifying actions and priorities from your SWOT
Review the results from each of your quadrants and identify any key goals and actions and their level of priority for your business. The following are rules of thumb:
- Goals and actions around the people and operational aspects of your business, will, in particular, come from looking at your weaknesses.
- Goals and actions around business growth will come from particularly looking at your opportunities.
- Goals and actions around making the most of your competitive advantage will come from looking at your strengths.
- Risk management goals and actions will come from looking at your threats.
A SWOT analysis can be used for any situation and can be applied as simple, quick situation analysis or be used to drill down into things as a thorough analysis.
Panagiotou, G. (2003) Bringing SWOT into Focus. Business Strategy Review, Vol 14, Issue 2, pp8-10.
YouTube Video: How to Perform a SWOT Analysis. Published by Virtual Strategist, Oct 19th 2016.
Wikipedia, SWOT analysis. en.wikipedia.or/wiki/SWOT_analysis