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A business plan is a written document describing your business and outlining its future. Business plans serve several purposes for those starting a new venture. They're often a first line of communication between your company and potential investors. Therefore, business plans provide, in one sense, the "first impression" of your business to potential investors. Additionally, business plans are often used to attract desired employees, create greater continuity with suppliers, and in many other situations that call for a succinct explanation of your company's identity and aspirations.
Any new business, especially startups, need a business plan. The document is an essential tool to identify need and address uncertainty (e.g. sales projections, operating costs, expense budgets, etc.).
Framework of a Startup's Business Plan:
Business plans are also important tools for existing businesses, even those with an established history of success.
Framework(s) of an Existing Business Plan:
In general, freelancers do not need one. However, if you are a freelancer that intends to devote a significant amount of time, resources, money and energy in a specific field or on a specific set of skills, a business plan can be a beneficial tool to make sure you maximize your potential as a freelancer.
Depending on your goals and needs, there are different business plans to consider.
Basic business plans include:
There are many ways to assess your business. In our view, however, all useful assessments include the following:
Overview: Business plans should identify both the current strengths of a business and areas of opportunity or improvement.
We recommend that each proposal have the following components:
This should include your name, title and contact information; the name of your company; the name of the person you are contacting.
Think of this section as the first impression of your plan, which is the first impression of your company. The summary should begin with your mission statement. Your mission statement needs to be well thought out.
Think of it as follows: how, in one or two sentences, would you describe your business? If a potential investor remembers nothing else, what core idea or concept do you want them to take away from your plan. The rest of the summary should provide a succinct overview of the highlights of the business plan and must be compelling enough to convince readers to continue reading.
Furthermore, your executive summary should be written as a stand alone document. In other words, a reader should be able to understand the summary and your company without having to consult other sections of the plan.
Recommendation: write your executive summary last, after you complete the rest of your business plan. Doing so will give you a better sense of what to highlight in your summary.
Every business plan is unique; therefore, the execution of each plan is also unique. It is therefore imperative that you have a general understanding of how you will execute your specific business. Doing so will help you identify the important questions, and subsequently craft answers for potential investors. The biggest of which being how are you going to make your business work? With that in mind, there are multiple elements to the implementation of virtually all business plans.
This should include further detail about the problem you are solving, how your products or services do so, your competitive advantage in the market, etc.
Who are your customers? This is essential to crafting your sales processes and marketing campaigns.
How are you going to market to your target audience?
What are your short term and long term goals? When do you plan on hitting those targets? Who on your team is responsible for each of those goals? How will you track growth and measure success?
Metrics are different for each business. Common metrics include:
Since internal business plans will only circulate within your company, this section is only necessary for standard/external business plans. It should include short biographies of each team member that details how they are uniquely qualified for their position.
Details how your business will earn profits or lose money over time (generally three months).
How much cash is brought in and paid out? What is the cash balance (generally per 1 month)?
Snapshot of the business' financial position at a specific moment in time.
The following equation should balance out: Liabilities + Equity = Assets.
How much do you anticipate you will sell in a certain period of time (1-3 years)?
You should provide answers to the following questions:
How much revenue do you need to generate in order to break even and cover all of your expenses?
In addition to the main document, you should provide an appendix containing resumes, personal financial statements, credit reports, lease copies, and reference letters for every major player in your startup, as well as copies of contracts, other legal documents and any other pertinent documents, at the end of your business plan.
1. Keep it concise 2. Keep your reader in mind 3. Make sure the language, prose, and jargon is easy for your target audience to understand
Needs Analysis: What evidence do you have that your target community needs the services your non-profit will provide? Alternatively, are there existing organizations offering similar services? How is your non-profit different from similar organizations, or how does it address an unfulfilled need in your target community?
A business plan is an essential part of getting your business off the ground. It is also an important tool for existing businesses to map out their future, optimize performance and manage growth. Well-executed business plans serve as a go-to guide detailing your business, its identity, its offerings, its financial status, and its path forward. They offer a quick but thorough introduction to potential investors, employees and anyone else looking to quickly get up to speed about your company. Effective business plans can mean the difference between whether or not your business attracts the capital and talent it needs to thrive, or whether an existing business is able to reach its full potential. We hope this guide is an asset in producing the best business plan possible.
What is SWOT?
SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities, & Threats.
SWOT analysis is a methodological tool designed to help workers and companies optimize performance, maximize potential, manage competition, and minimize risk. SWOT is about making better decisions, both large and small. It can help you determine the efficacy of something as small as introducing a new product or service or something as large as a merger or acquisition. Again, SWOT is a method that, once mastered, can only enhance performance.
The Essential Guide to SWOT Analysis is a well-researched, well-written, and well-rounded guide co-authored by Justin Gomer and Jackson Hille.
Justin Gomer is a Lecturer at the University of California, , and soon-to-be author of two books.
Jackson Hille is a Content Associate at FormSwift and the 2013-14 Departmental Citation Recipient in American Studies from the University of California, .
This guide will teach, prepare, and provide you with all the necessary tools to become a SWOT expert. It is complete with SWOT Samples from innovative companies, such as and , a thorough examination of SWOT Analysis' central components and uses, and free SWOT Templates. It is valuable for everyone, including creatives in the startup and entertainment worlds, policy planners in the non-profit and government sectors, and entrepreneurs in the real estate and restaurant industries.
Who Should Use
Because SWOT is a method, anyone can use it for any business purpose, large or small. Whether you are a large team in a Fortune 500 Company assessing the utility of a USP, or an individual worker taking stock of your current or future position/role, this guide will serve as a useful tool.
Your company is at risk! At risk of immobility, that is. Stasis is the enemy of any business. SWOT analysis is the antidote for stasis. This guide offers a comprehensive introduction to SWOT.
This guide is easy to read, concise, and driven by examples. More importantly, it is informed by extensive research on SWOT in leading business journals and magazines.
How To Use
We designed this guide to work from all angles and for people with different levels of familiarity with SWOT.
For newcomers to the method, we suggest you read the guide start to finish, in order to familiarize yourself with SWOT's history and applicability.
For SWOT experts, while we think it is always helpful to review the basics, scroll down to the sections on which you need more information, maybe sections specific to your type of organization (e.g. non-profit). Maybe you just want to check out our SWOT Matrix Templates. We encourage you to jump around as you wish!
A Brief History of SWOT
SWOT Analysis was the product of a decade of research at the Stanford Research Institute between
1960-1970. By the late-1950s, many American Corporations had grown frustrated that their significant financial investments in strategic business planning had failed to produce acceptable results. So, in 1960 a number of
these corporations initiated a project at Stanford to develop a better method for strategic planning. The result
Conducting a SWOT Analysis
When to Conduct a SWOT Analysis
When should you conduct a SWOT analysis? There are countless situations in which a SWOT analysis will prove beneficial.
If any of these questions speak to your organization's needs, a SWOT analysis can significantly help.
Ultimately, if it is beneficial to re-examine your position within your market niche (Weaknesses, Threats from competitors) and identify your core benefits (Strengths) and determine how those can open new areas of growth (Opportunities), a SWOT Analysis will prove an asset.
Why Conduct a SWOT Analysis?
Why SWOT it out? A SWOT analysis provides organizations with an opportunity to accurately assess their position in their particular market or field. As the Kansas University Work Group For Community Health And Development writes, "Developing a full awareness of your situation can help with both strategic planning and decision-making."
A SWOT analysis, which offers "simplicity and application to a variety of levels of operation," is an ideal way to develop such awareness, which can then be used to craft a sound strategy that capitalizes on an organization's internal strengths and external opportunities, while simultaneously addressing (internal) weaknesses and (external) threats. Moreover, although "originally developed for business and industry," SWOT Analysis "is equally useful in the work of community health and development, education, and even personal growth."
S.W.O.T. - Breaking Down the Components of SWOT
Once you've identified the subject of your SWOT analysis, it is time to begin. SWOT consists of four components--Strengths, Weaknesses, Opportunities, and Threats. These four components are organized into two categories--internal and external. That is, look internally for Strengths and Weaknesses, and look externally for Opportunities and Threats.
Once you've identified the subject of your analysis (e.g. should we add x product to our lineup?), it is time to identify your strengths. Quality and reliability, for example, should always be strengths for any organization. More specifically, Charlie Ioannou defines strengths as "the resources and capabilities that can be used to develop a competitive advantage" (Ioannue, SWOT Analysis - An Easy to Understand Guide, 47-49).
This brings us to perhaps the most important aspect of the Strengths assessment: it is imperative that you analyze your strengths(and weaknesses) in relation to your competitors. In other words, what are the unique features of your company--a well-established company with established brand trust, lower production costs, superior customer service, stronger web presence, etc.--that will provide a competitive advantage? Identify those and you've identified your strengths.
Now identify your weaknesses. The more honest you are here the better. One way to think of weakness is the absence of strength. Therefore, the items of your business model you did not identify as strengths above are the first place to look for weaknesses. Cash flow, brand recognition, marketing budgets, distribution networks, age of your company, etc. are all places to consider when assessing weaknesses. The idea here is that you'll turn these weaknesses into strengths. Doing so, however, requires an honest assessment of where your company needs to improve.
Now that you've looked internally for Strengths and Weaknesses, its time to look externally for Opportunities and Threats. Opportunities and Threats interact similarly to Strengths and Weaknesses. That is, they draw on similar dynamics (external ones, in this case) to assess whether those create opportunities or threats to your business.
Here is where you identify the opportunities for growth, greater profit, and larger market share. Again, assessing opportunity in relation to competition is imperative. What opportunities are there for you to distinguish your company from your competitors? What opportunities can you identify to offer a similar service or product at a higher quality or at a lower price than your competition? What are the needs of your customers that your field does not currently address?
Technology is an external factor that always presents new opportunities and, as we shall see, new threats. What technological innovations open up new opportunities for your business to lower costs, speed up production, market more effectively, or improve customer service?
The key with Opportunities is that they must be acted on. Remember, if you don't act your competitors will.
Lastly, in which areas is your company at risk? Is your competitor developing a product to compete with one of yours? Is there a new or bigger company poaching your best employees? These are all threats to your business.
The Harvard Business Reviews defines "Threats" as "possible events or forces outside of your control that your company or unit needs to plan for or decide how to mitigate."
What about new legislation? Does a new law or proposed law threaten your production costs? What about new tax laws? A yes to any of these equals a threat.
Lastly, just as technological innovation may provide an opportunity, it can also issue a threat.
Threats to the business now include lawsuits over insurance liability, legislation proposing banning the service, and higher profit-margins at competing companies.
Putting Your SWOT into Action
Choosing an action plan after a SWOT analysis is a complicated process that is specific to each decision
in each company. However, there is a general philosophy regarding how to approach action with the results of a SWOT. Here it is:
Another important thing to remember is that the purpose of a SWOT analysis is to assess your organization's current position. Therefore, as the University of Kansas encourages, use your SWOT to look for a "stretch," not just a "fit." SWOT's are often improperly used to justify complacency and verify current practices. If you are conducting a SWOT to identify areas of need and/or growth, it is imperative you use the analysis to diagnose where you can "stretch."
SWOT Examples From Various Industries
Below are descriptions of and links to a series of SWOT analyses in a variety of industries to help get you started:
We drew from the first in our example above. The second, is driven by the following questions: "Is Uber prepared to rule the transport world in 2015?." What does Uber's future look like? "Should they expand further without decreasing the impact of weaknesses that they are already aware of or will Uber's expansion be held up by surrounding threats?"
Uber's low cost, unlimited fleet of cars, convenience of use and flexibility of driver schedule are some of its key strengths. Its unpredictable customer volume and the ease of imitation make up central weaknesses. That Uber's services are only offered in a handful of metropolitan areas provides significant opportunities in suburbs and untapped cities. Lawsuits and proposed legislation to ban the service in certain cities, moreover, comprise Uber's most serious threats.
Here are two SWOTs from major film companies. In the first, Warner Brothers Entertainment conducted this SWOT in 2004 after their President decided to re-evaluate the company's approach to movie production in light of the popularity of big-budget "blockbusters."
Warner Brother's brand recognition, size, and cash reserves were obvious strengths, while the fluid and subjective process of purchasing scripts and green-lighting films, as well as unpredictable film budgets and production timelines made up key weaknesses. Growing audiences abroad provided the most significant opportunity, while upstart film companies and piracy posed significant threats.
In the second example, DreamWorks Animation explores distribution options in light of the popularity of the company's 3D films. Written against the backdrop of the Great Recession, the SWOT Analysis focused on whether the opportunities presented by producing all films in 3D from inception could counteract the threats of a general economic downturn, which was depressing overall box office receipts. DreamWorks had the ability to take advantage of the opportunity in 3D film production because of its two central strengths: a large animated film inventory, such as the Shrek franchise, and an attractive work environment for creatives. Capitalizing on the expanding opportunity of the 3D film market in a successful manner would allow DreamWorks to overcome at least one of its main weaknesses: a sinking stock price, precipitated by the downturn at the box office.
Yahoo! Sports columnist Glenn Logan completed this SWOT analysis of the University of Kentucky's Men's Basketball Team at the conclusion of the 2014-2015 pre-season in order to assess the team's chances to win the NCAA National Title.
As Logan assessed, Kentucky's size, depth, and unselfish play were its biggest strengths while free-throw and 3-point shooting some of its greatest weaknesses. Surveying the rest of the NCAA landscape, Logan concluded UK's tough out-of-conference schedule along with its international pre-season tournament trip afforded unique opportunities to gain useful experience for a deep run in March, while youth and injury posed their largest threats.
The US Nuclear Regulatory Commission posted a SWOT worksheet in advance of a Webinar on their Open Government program. In this case, SWOT provided an opportunity for employees to brainstorm and prepare their assessments of the program in advance of the more thorough evaluation of the Open Government at the Webinar.
For the NRC's Open Government program, the live feeds of meetings and blog casts create transparency and accessibility for viewers and employees. In terms of weaknesses, the somewhat convoluted website made it difficult to find certain information. Employees identified social media--Twitter, Facebook, etc.--as areas of opportunity and the difficulty of balancing transparency while maintaining full public confidence as a significant threat.
Lastly, here are two examples of SWOTs for small businesses. The first example discusses the restaurant business and the second the construction industry, While these examples do not refer to specific companies, they nonetheless offer insightful information on the specifics of SWOTs in their respective industries.
For a restaurant, high-quality food, price, taste, and customer service are all areas to look for strengths. These areas can also reveal weaknesses. Could your customer service improve? Are your prices competitive? Is your food delicious? Adding online ordering or delivery service may provide an opportunity to generate new business, while new competing restaurants and changes to the cost of food (e.g. a rise in the price of fish) pose areas of threat.
In construction, a trusted and reliable brand name as well as a consistent ability to complete work on schedule are major strengths. Conversely, delays or the inability to perform certain work are weaknesses. In terms of new opportunities, consider examining your city's plans to expand public transportation and how such an expansion provides new opportunity for business and residential construction. As the housing bubble demonstrated, fluctuations in the housing market pose the biggest threat (or opportunity in times of economic boom).
From SWOT to TOWS? Flipping
The Script To Maximize Results
Are we SWOTing all wrong? There is a school of thought, found often in the Harvard Business Review, for example,that insists this method produces more effective results when done backwards--TOWS rather than SWOT. Here's Michael Watkins, cofounder of Genesis Advisors, in HBR:
I would introduce the [SWOT] tool, then ask the team to focus on identifying organizational strengths and weaknesses, and end up in abstract, navel-gazing discussions about "what are we good at" and "what are we bad at."
I decided to experiment with running the process in the reverse order and was amazed at the difference. Teams were able to have focused, productive discussions about what was going on in the external environment, and to rapidly identify emerging threats and opportunities. This provided a solid foundation for talking about weaknesses and strengths. Do we have weaknesses that leave us vulnerable to emerging threats? Do we have (or can we acquire) strengths that enable us to pursue emerging opportunities?
We suggest you experiment with both. Try it frontwards and backwards and figure out which results work best for your team.
We can help you get started. Select a template below and begin analyzing your business.
Fine, Lawrence.The SWOT Analysis. (2011)
Ioannou, Charlie. SWOT Analysis: An Easy to Understand Guide. (2012)
SWOT Analysis I: Looking Outside for Threats and Opportunities. Harvard Business School Press.(2005)
SWOT Analysis II: Looking Inside for Strengths and Weaknesses. Harvard Business School Press.(2005)
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