Business success does not come from luck or by accident. It comes from planning. I recently had lunch with a business banker who reiterated these same sentiments. He mentioned that he sees businesses fail, not because they are not profitable but because they don’t cash flow. Some simple analysis of your business can guide your strategy over the next year in a very focused way to avoid some of the cash flow challenges you might otherwise face.
You may be familiar with the term S.W.O.T. analysis-Strengths, Weaknesses, Opportunities, and Threats. It is essentially a technique for analyzing your business to come up with the most suitable strategies for success. A S.W.O.T. analysis provides an internal assessment of your organization as well as an external assessment of your business environment. It asks these questions:
STRENGTH: As an organization, what do we do well?
WEAKNESS: As an organization, what could we be doing better?
OPPORTUNITIES: What possibilities exist in the marketplace that can help our business realize our vision?
THREATS: What particular situation exists in the marketplace that could prevent us from realizing our vision?
Objective self analysis is difficult. A S.W.O.T. analysis keeps you focused and realistic. When you have answered the questions, you can then begin to build on your strengths to take advantage of opportunities and develop new strategies to neutralize weaknesses. This invaluable analysis can provide greater security and growth prospects in a constantly changing business environment.
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