The SWOT analysis is usually one of the easier sections of the business plan to write. In most cases, a SWOT analysis is drafted in a bullet point format. Specific issues regarding strengths, weaknesses, opportunities, and threats are showcased in four different sections. As it relates to the strengths section, most entrepreneurs focus on the fact that their business offers a unique product or service that is highly competitive in the marketplace. One of the common strengths for a new businesses is that they are able to effectively undercut their competition in regards to price. This is true especially for service-based businesses that are looking to expand their visibility at the onset of operations by offering substantial deals on the services that they render.
For product focused companies, this is a little more difficult given that they do not have the same buying power as large established corporations. One of the other things that is often included in the strength section of the SWOT analysis it is a discussion regarding the experience of the individual entrepreneur or management team. If you or your management team has had significant experience in the industry as well as an established track record of successes with the development of new entrepreneurial ventures then this should be very much highlighted within this section of the analysis. One of the other things that many entrepreneurs will discuss within this section is whether or not their business generates recurring streams of revenue from service. For instance, if your business is an online subscription focused website that you may want to point out the fact that your company will generate income month after month as credit cards or build. This can be one of the primary strengths as it relates to growing the business since these funds can be reinvested. As it relates to specific industries, certain buyers are able to acquire inventories at rates that are lower than that of the general market. As such, if a business has access to distributors that can provide them with their products at a highly competitive rate then this cost savings can be passed on to a customer. These are all examples of how strengths are showcased within a SWOT analysis.
The next section of the analysis is weaknesses. Although many entrepreneurs don’t want to think about their business having weaknesses or issues this is simply not the case. Every business is going to have specific issues that they need to deal with either on a one-time basis or on an ongoing basis. As such, it is important for the entrepreneur to sit down and really think about some of the critical issues and problems that the business or the industry as a whole will have forward. Certain weaknesses include the fact that some businesses are highly sensitive to changes in the economy. For instance, a luxury goods retailer may see a significant decline in the revenues in the event that there is an economic recession. Other examples of weaknesses include medical businesses that may face significant liabilities as it relates to mistakes that are being made. Finally, one of the primary weaknesses in his face by most businesses is that they are our substantial underlying operating costs. For example, a large-scale retailer is going to need to have a substantial space that will have a very high rental expense as well as a number of employees that are expensive on a per hour basis. These can be an example of a weakness for a retailing business.
For the opportunity section, this primarily discusses how the business will expand over a three-year period. Examples of this include the establishment of additional locations, continued expansion of the company’s marketing campaigns, acquisition of third-party companies, and acquiring additional rounds of capital in order to further expand the business. As each business has unique ways that they can grow – it is important for the entrepreneur to think of ways that they can expand the business once they reach profitability. This is especially true in service-based businesses that deal in billable hours. An example of an opportunity for a law firm, which is a service-based business, would be to hire associate that can increase the billable hours on an ongoing basis. Examples like this should be shown within the SWOT analysis.
The final section of the analysis is the threat section. Many people often confuse this with the weaknesses section given that this is again one of the issues that most entrepreneurs don’t want think about given that it can from their livelihoods. However, it is important to assess whether or not specific threats could have a very damaging or deleterious effect on an individual company’s ability to generate revenues. An example of a threat would be a regulation change that could substantially impact the way the company does business. For instance, a lender could face a change in banking regulations that forces them to maintain interest rates at a certain level. This type of threat is external to the company’s operations but it still can have a negative impact on the profit and loss statement. While it is difficult to imagine every different scenario that could occur that could impact the company’s operations – it is important for the entrepreneur to try their best as it relates to viewing certain external risks that could impact their profitability. This is one of the sections that many experienced entrepreneurs will take a tremendous amount of time to develop given that they want to understand all the potential underlying risk that they may face as they develop their business and their respective operations.
Home healthcare agencies are businesses that
are completely insulated from negative changes in the economy. This is due to
the fact that people that are elderly or have disabilities require ongoing and
constant care on a day-to-day basis. Most importantly, and one of the key
strengths for a home healthcare agency is that they are always able to remain
profitable and cash flow positive. These businesses are able to generate
revenue directly from patients, public as well as private insurance. While
there have been some issues with the reimbursement rates that are associated
with in-home care, the demand among families to have proper nurses and aides
can disabled family member is substantial.
As such, these businesses are able to produce
very high gross margin income while not having to maintain a substantial
overhead cost. The gross margins generated 5% depending on whether or not bad
debt expense is factored into the cost of goods sold. These businesses do have
moderate barriers to entry given that licenses from the state as well as the
federal government are required in order to render the services to the general
public. It should be immediately noted that there are some companies operate in
a non-medical capacity, which allows them to operate with a limited amount of
licensure. A qualified attorney should hired to ensure that the home care
agency is operating within the letter of the lot all times. The startup costs
for this type of business typically ranges anywhere from $25,000 to $100,000
depending on the number of people that are going to be on staff at the onset of
As it relates to weaknesses, despite the fact
that these businesses are highly immune from negative changes in the economy –
there are a number of issues that arise from operating this type of business.
Foremost, a substantial amount of compliance needs to be adhered to at all
times given the nature of this work. Large-scale malpractice and liability
policies need to be put in place in the event of an on-site accident.
Additionally, depending on the nature of the home healthcare agency – personnel
expenses can be very high. This is especially true if the agency is going to be
providing skilled nursing services. within any given market there is usually a
substantial amount of competition in this field.
As it relates opportunities, there are numerous
ways in which a home healthcare agency can boost its revenues. Foremost, these
businesses can hire additional nurses, certified medical assistants, and
certified nursing assistants to render a larger degree of services within the
target market. Some healthcare agencies also expand by simply acquiring similar
businesses that are already in operation. Home healthcare agencies typically
have substantial access to capital given that they are able to produce highly
predictable streams of revenue on a month-to-month basis while concurrently
being able to generate income from publicly funded healthcare sources from time
to time. One of the common trends within this industry is to offer non-emergency
medical transportation services, which can drastically boost the revenues of
any home healthcare agency.
For threats, as this is a healthcare focused
business there are a number of issues that can cause substantial damage to the
business. As mentioned above, malpractice or injury can cause a significant
number of lawsuits to accrue. Additionally, changes in political policy –
especially as it relates to reimbursement rates – can have an impact on a
company’s profit and loss statement. As such, an entrepreneur that enters this
field needs to keep a very tight control on all underlying expenses in the
event that certain reimbursement rates are reduced.
Home healthcare agencies are going to continue
to remain in strong demand especially as the baby boomer population ages.
Almost 44 million people within the United States are required to care
for an elderly person or disabled person on a day-to-day basis. This number is
expected to increase significantly over the next twenty years. As such, a home
healthcare agency can be a highly lucrative small business opportunity that has
substantial growth potential over the next two decades.
Clothing stores remain as one of the few retail businesses that will continue to operate in a brick-and-mortar capacity despite the substantial increases in e-commerce. This is primarily due to the fact that people want to try on clothing before they make a purchase. This is one of the key strengths for this type of business. The startup costs associated with the new clothing store are relatively low in these businesses can be started for $50,000 to $100,000 depending on the location and the amount of inventory that will be carried at the onset of operations. It should be noted that many manufacturers will provide clothing inventories on a credit basis in order to reduce the amount of startup costs that are required by a clothing store entrepreneur. The gross margins from sales for these types of businesses is significant. Most clothing stores have gross profits that range anywhere from 40% to 70% of aggregate revenues. One of the other key strengths associated with these businesses is that they are highly scalable. Once the initial location becomes profitable, a clothing store entrepreneur can easily establish additional locations.
As relates to weaknesses, clothing stores do have moderately high operating costs given at an expensive retail facility must be being maintained along with a large staff. These expenses must be kept heavily controlled especially given the fact that clothing stores are also subject to economic fluctuation. During times of economic recession, most clothing stores do experience a moderate decline in the amount of revenue that they generate on a month-to-month basis. As such, a qualified entrepreneur is going to need to make sure that all unnecessary expenses are trimmed from a clothing stores annual budget.
As it relates to opportunities, clothing stores can again expand by simply establishing additional locations. Most financial institutions are willing to provide a working capital line of credit or business loan secured by the inventory and predictable revenue streams of the business. Many clothing stores also establish substantial online presences via a proprietary website while concurrently maintaining a presence on Facebook, Twitter, and Instagram. This is especially important as people may come directly to the clothing store and then ultimately make their purchase online. Having a large-scale online presence is an absolute necessity for any clothing store entrepreneur.
As it relates to threats, outside of a major economic recession there is no otherwise direct threat outside a competition. The clothing store must find ways to differentiate themselves from other retailers in the market. This is usually accomplished by sourcing unique apparel from a number of different manufacturers so that customers can try on a number of different types of clothing from one location. There are no pieces of pending legislation or regulation that would substantially impact the way the clothing store conducts their operations.
Clothing stores will remain popular for the foreseeable future. Again, with the rise in e-commerce – brick-and-mortar clothing retailers have had to find ways to differentiate themselves from online sellers. This includes providing outstanding level of service that is not able to provided in an online capacity. For an entrepreneur that is very well familiar with how a retail store operates, a clothing store can be a highly lucrative small business enterprise that is readily scalable.
Over the past five years, vape shops have become very popular businesses
as more and more people seek to stop smoking traditional cigarettes. Although
the taping is not exactly the most healthy thing that a person can do, it is
believed that it is far better than smoking tobacco cigarettes. As such, these
businesses have exploded in demand for electronic cigarettes and related
products. The startup costs associated with the new vape shop are relatively
low, and these businesses can be founded for as little as $50,000 was much as
$150,000 depending on the location and the amount of inventory that is going to
be carried. One of the key strengths related to these businesses is that they
typically are able to generate a substantial repeat customer base once they
establish operations. The gross margins from sales ranges from 50% to 70%
depending on the specific products offered by the business.
As it relates to weaknesses, vape shops are
required to adhere to all laws as it relates the sale of tobacco and tobacco-related
products. As such, procedures and protocols need to be put in place in order to
prevent people under the state minimum age from purchasing these products. The
retail sales space associated with these businesses can also be somewhat of a
high expense especially in a highly trafficked area.
For opportunities, these businesses can readily
expand by simply establishing additional locations outside of the initial
target market. For vape shops, this is typically the only way that these
businesses are able to expand and less the business develops an online
platform. It should be noted that only certain products relating to this
product line can be offered in an online capacity as per regulation.
For threats, outside of major competitive issues
are is really nothing that is going to impact the way that these businesses
conduct their operations. Of course, strong procedures need to be put in place
in order to ensure that the business is able to remain within the letter of the
law at all times. During times of economic recession, most vape shops are able
to remain profitable and cash flow positive is this is typically considered a
product that is part of a person’s lifestyle. Additionally, this is a
relatively low cost product line that is in continued demand among the general
Vape shops can be a highly profitable small
business enterprise for an entrepreneur that has extensive experience in the
field of retail management. These businesses are enjoying a very substantial
rate of growth which is expected to continue in perpetuity as people stop
There are a number of absolute strengths as a relates to managing a hedge fund. Foremost, these enterprises are generally able to produce profits in any given environment. This is the nature of a hedge fund, and many investors seek out these investment vehicles simply because they can produce substantial income and capital appreciation even during bear markets and economic recessions. One of the key strengths of managing of hedge fund as well as at the operating costs are typically very low. Only a handful of people are needed to manage even a large-scale hedge fund. The profitability of these businesses can also be substantial given that most hedge fund management companies take a fee equal to 1 to 2% of total assets managed coupled with a fee of 20% on all profits generated. This can be a highly lucrative business for someone that is very familiar with how to profit in any type of market. The startup costs for a new hedge fund range from $100,000 to $500,000 (for infrastructure).
For weaknesses, hedge funds have a number of regulations that they must adhere to on an ongoing basis. Most hedge fund managers are required to have securities licenses including the series 65 license. A qualified compliance attorney must be hired in order to ensure that the hedge fund is complying with all security and exchange commission regulations as well as among other state-based securities commissions.
For opportunities, the fastest way that most hedge funds grow it simply by acquiring additional capital from their already existing group of investors. Some hedge funds will maintain a number of different series in order to provide different types of returns for different types of investors. This is really the only way that these businesses grow. Additionally, many hedge fund managers will reinvest their portion of their profits back into the fund in order to produce higher returns in subsequent years.
For threats, hedge funds are continually undergoing changes as it relates to their regulations and laws that guide their activities. Again, a qualified compliance officer or a third-party attorney that is familiar with securities compliance must be hired in order to ensure that the hedge fund is operating with the letter of the law at all times. Additionally, depending on the type of investments made – economic recessions can drastically impact the profitability of these businesses. As such, a qualified hedge fund manager need to have a number of strategies in place in order to ensure that profitability occurs at all times. For a hedge fund manager that has an extensive track record of producing profits on a yearly basis the ongoing competitive issues are relatively low.