SWOT Analysis Is No Magic 8 Ball

Written by Tim Knox

Q: A key investor in my business has suggested that I hire a consultant to do a SWOT Analysis to help plan forrepparttar future. I try not to argue with my investors, but I'm not so sure I need to have this done. What do you think? -- Laurie B.

A: Laurie, before you call inrepparttar 149039 SWOT team to deal with this investor (sorry, couldn't resist that one), let me tell you exactly what a SWOT Analysis is and how it can not only help you plan forrepparttar 149040 future, but get a gauge of how your business is doing today.

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT Analysis is a written exercise that can help you clarify and focus onrepparttar 149041 specifics that make uprepparttar 149042 four areas that most affect your business. The purpose of a SWOT Analysis is to help you build on your business' strengths, minimize and correctrepparttar 149043 weaknesses, and takerepparttar 149044 greatest possible advantage of potential opportunities while formulating a plan to deal with potential threats.

Think of a SWOT Analysis as a checkup for your business. By spending a little time examiningrepparttar 149045 internal and external factors that affect your business' health you can better gaugerepparttar 149046 present state of your business and identify things that may adversely affect your business' health inrepparttar 149047 future.

It's a good idea for every business to perform a SWOT Analysis on occasion, especially if you are doing strategic planning, contemplating a change in direction or formulating new strategies for distribution, marketing and sales.

Should you hire a consultant to perform a SWOT Analysis for you? Speaking as a consultant who has been paid to perform SWOT Analyses for companies inrepparttar 149048 past, I can honestly (and yes, without bias) say that depends on three factors: (1)repparttar 149049 size of your company; (2) how in-depthrepparttar 149050 SWOT Analysis needs to be; and (3) how much of your investor's money you'd like to spend.

Larger corporations are most likely to hire professional firms to perform such analyses, primarily due torepparttar 149051 complex nature of big business. Some corporate SWOT Analyses can run on for several hundred pages. Typically, a consultant will charge up to $100 or more per hour to perform a detailed corporate SWOT Analysis and most large companies consider this money well spent as a good SWOT Analysis can reveal otherwise ignored factors that might increaserepparttar 149052 company's bottom line or help avert future losses.

For a smaller business, however, a professional SWOT Analysis can be an exercise in overkill. For your money you will get an impressive, detailed report that will make for great show at your next investor or board meeting and a wonderfully expensive door stoprepparttar 149053 rest ofrepparttar 149054 time. I don't mean to belittlerepparttar 149055 value of a professional SWOT Analysis for small businesses. It's just that smaller companies can learn as much from their own efforts as that of an expensive consultant.

You can perform a simple SWOT Analysis with a #2 pencil and a fast food napkin, but to get a truly accurate view of your company's SWOT factor I suggest you do things a bit more formally (and withoutrepparttar 149056 aid of condiments). I recommend that you involve allrepparttar 149057 key players in your business, including management, employees, your attorney, accountant, even your spouse. My wife often gives me insights into my business just from listening to me talk at dinner. Sometimes we business owners and managers can't seerepparttar 149058 forest forrepparttar 149059 trees. It's good to have someone else point out things we might miss.

Here's how to perform a simple SWOT Analysis. On a piece of paper draw a vertical line downrepparttar 149060 center. Now draw a horizontal line throughrepparttar 149061 center ofrepparttar 149062 page. The paper is now divided into four quadrants. Inrepparttar 149063 first quadrant (upper left) writerepparttar 149064 word "Strengths." Inrepparttar 149065 quadrant next to that write "Weaknesses." Drop down torepparttar 149066 second tier and labelrepparttar 149067 first quadrant (lower left) "Opportunities" andrepparttar 149068 remaining quadrant "Threats."

Achievements Outweigh Education And Experience

Written by Tim Knox

Q: When it comes to succeeding in business, which do you think is more important: education or experience? -- Regina M.

A: Regina, have you seenrepparttar television show, Fear Factor? If you haven't seen it you've probably heard about it. Fear Factor isrepparttar 149038 show where they put contestants through all sorts of pseudo-death defying feats like bungee jumping off a bridge over a pool of crocodiles and driving a car through a wall of fire (you know,repparttar 149039 stuff we did for fun in high school).

The contestant who overcomes their personal fear factor winsrepparttar 149040 cash and prizes (usually atrepparttar 149041 cost of their dignity, but I digress).

The highlight of Fear Factor isrepparttar 149042 eating competition. That's when contestants are invited to partake of all sorts of culinary fare. Yummy stuff like monkey brains, all manner of live bugs and spiders, moose intestines, old fruitcake (the horror!), and my personal favorite, live giant worms. At this pointrepparttar 149043 competition becomes not so much who can overcome their fear actor, but who hasrepparttar 149044 lowest gag reflex.

Your question makes me feel a little like those contestants, Regina, because no matter how I answer I am opening a can of giant worms that I will undoubtedly be forced to eat later.

My highly educated peers will argue that education is much more important than experience, while my highly experienced peers will argue that experience is more important. Either way, it's worms ala carte for me.

Oh well, I've eaten more than my share of crow overrepparttar 149045 years.

How much worse can worms be?

It's important to understand thatrepparttar 149046 success of an entrepreneur is not measured by how much education he or she has or how many years of experience are under his or her belt. An entrepreneur's success is measured by achievements, not words on a resume.

By definition, an entrepreneur is a risk-taking businessperson: someone who sets up and finances new commercial enterprises to make a profit. Entrepreneurs start businesses. The smart ones then hire MBAs to run them.

Let's start with education. Is a Bachelor's degree or better required to succeed in business? Of course not. An MBA from Harvard might give you a leg up in a job interview, but it certainly doesn't guarantee that you will succeed in business. Nor does it automatically mean that you will be a better business person than someone who didn't finish high school. Knowledge is a good thing - if you know what to do with it.

Perhaps it isrepparttar 149047 academic environment itself that turns mere mortal nerds into budding entrepreneurs. The late '90s proved that college students with no experience beyond organizing a frat keg party could start businesses that would exceed all expectations.

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