Now just fill in each quadrant accordingly. Strengths and weaknesses are internal factors that affect your business. Opportunities and threats are external factors. Let's look at a quick overview of each.

Strengths are those things that make your business stronger. Strengths might include: a product or service that sells well; an established customer base; a good reputation in marketplace; a good track history; a high traffic location; strong management; qualified employees; ownership of patents and trademarks; and any other aspect that adds value to your business and makes it stand out from competition. Strengths should always be gauged by strengths of your competitors. If your business does something well just to keep up with competition, it is not a strength. It is a necessity.

Weakness are antitheses of strengths. Weaknesses are those areas in which your company does not perform well or could stand improvement. These are areas of your business that make you susceptible to negative market forces and aggressive competitors. Weaknesses might include: poor management; employee problems; lack of marketing and sales expertise; lack of capital; bad location; poor products or services; damaged reputation; etc.

Opportunities are those things that have potential to make your business stronger, more enduring, and more profitable. Opportunities might include: new markets becoming available or old markets that are expanding; possible mergers, acquisitions, or strategic alliances; a competitor going out of business or leaving marketplace, making their customers open to you; and potential availability of a desired employee.

Threats are those things that have potential to adversely affect your business. Threats might include: changing marketplace conditions; rising company debt; cash flow problems; a strong competitor entering your market; competitors with lower prices; possible laws or taxes that may negatively impact your profits; and strategic partners going out of business.

Once you have filled in all four quadrants, you can use this information to create strategies that will help you make best of information learned. For example, once you have identified your strengths you can better use them to determine which opportunities to pursue and to help reduce your vulnerability to potential threats.

Now that you know your weaknesses you can formulate strategies to overcome them so you can pursue opportunities. Knowing your weaknesses can also help you establish a defensive plan to prevent your weaknesses from making your business particularly susceptible to external threats.

Whether you use a consultant or create a SWOT Analysis on your own it is important to remember that a SWOT Analysis is a subjective analysis tool that can be strongly influenced by opinions of those performing analysis. For small businesses especially it is imperative to keep analysis simple and to point. Don't overanalyze and don't immediately take results as gospel.

Remember, it's an analysis tool, not a magic 8 ball.

Here's to your success!

Tim Knox Tim@smallbusinessqa.com

Many would argue that key to success for most of these ventures was that founders (or VC financing them) were smart enough to know that while they had an abundance of education, they needed experienced managers to really run show.

Larry Page and Sergey Brin were college students when they started company that would become Google. They were smart enough to bring in Eric Schmidt to be chairman and CEO when business took off. Schmidt was former CEO of Novell and CTO of Sun Microsystems. A PhD, Schmidt is a man of education and experience.

Jerry Yang and David Filo were candidates in Electrical Engineering at Stanford when they started YAHOO (Yet Another Hierarchical Officious Oracle) in 1994. They brought in Tim Koogle from Motorola to run things shortly thereafter and now company is led by Terry Semel, who previously spent 24 years running Warner Bros.

Now on to experience. Is experience a prerequisite of business success? Again, not at all. Many experienced entrepreneurs gained their experience in failed businesses, so experience does not instantly translate to success.

So, when it comes to succeeding in business, which is more important: education or experience? While neither is as helpful as a rich relative, here's answer that will hopefully help me avoid those worms: Both education and experience can play a large part in business success.

The more important question is can you succeed in business without one or other, or even without both? And answer to that one is: yes. Can I get ketchup with those worms?

Many successful businesses were started by first time entrepreneurs who never went to college. Natural talent, ambition, drive, determination, and good old dumb luck have fueled many success entrepreneurs, myself included. I don't have a degree (I drove past a college once. It looked hard, so I kept going). Would a degree have helped make my business trek easier? Perhaps.

Then again, I know people with advanced degrees who are flipping burgers at McDonalds. It's good experience, I suppose.

A combination of education and experience (and a variety of other things) is best recipe for success. As old saying goes, "There is no better education than that which comes from experience."

In end, it really doesn't matter how much education, experience, talent, luck or money you have. It's what you do with it that matters.

Here's to your success.

Tim Knox