Business Plan SWOT Analysis

SWOT Analysis is a very useful tool used in strategic and business planning to assess the situation surrounding your home based business idea. SWOT is an acronym for Strength, Weakness Opportunities and Threats.

Strengths and weaknesses are internal to your business. In another words, strengths and weaknesses are advantages, abilities, or perhaps special products you have, or don't have, within your business.

Opportunities and threats are external to your business. In other words, they are things that "come at you" from the market. Gas prices are a good example of a threat - especially if you operate one of those work from home businesses that require a lot of driving. Opportunities are things that are opening up in the market around you that you might be able to use to your advantage.

An interesting characteristic of SWOT is that your strengths are normally the tools you use to take advantage of opportunities. Without your strengths the opportunities would not present themselves. Your weaknesses, on the other hand, are often the cause of your perceived threats. An event threatens your business, because it appears in an area where your are currently weak.

Mistakes People Make when doing SWOT Analysis for their Business Plan

1. Over-generalising. This is the most common mistake people make in SWOT Analysis. Listing competition as a threat, when every business faces competition, for instance. Being specific aids in identifying SWOT. Listing a specific new competitor who has entered the market, or better yet, the specific competitive strength that directly threatens your business enables you to develop strategies for successfully dealing with the challenge.

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