Models To Run Your Business (Idea) Through: SWOT Analysis

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This is the continuation of my series on the models to run your business through; you can read the first part here (Porter's five forces), the second part here (Competitive advantage matrix) and the third part here (PEST). Today's is on SWOT Analysis. 

SWOT Analysis is an internal analysis of your company's strengths, weaknesses, opportunities and threats. It allows you to gain a balanced view of your company's standing and areas of concern.

And as usual I will be using my company for illustration.

For my company, the main strengths are:

  1. we are in a growing industry;
  2. we also have a deep knowledge of both the industry and the local market;
  3. we play in a very lucrative niche, shielded from competition because the industry is still too young for the type of turnover that attracts big competition but the profit margin is excellent; and
  4. we have a good reputation and visible expertise in the industry. 
Again, for my company. the weaknesses are:
  1. we have a low capital access as it's essentially a bootstrapped company (funding comes directly from me and reinvestment of earnings);
  2. we are a very small team and I am the only full-time staff (this severely limits the amount of projects we can handle at a time);
  3. too focused on the Nigerian market (this places a cap on our growth potential and exposes us to risks that come with in-country economic cycles)
The opportunities are:
  1. again, we are in a fast growing industry;
  2. we are currently experiencing demand outstripping our supply capacity (so I am moving into a more protected niche of the industry with the highest potential profit before increasing head count);
  3. there is no clear industry leader and if we play our cards right we can emerge as the industry leader; and
  4. the local market is very green; we currently face very little competition overall.
The threats my company face are:
  1. liability of newness. It is taking us longer than we expect to have a structure for the company. Everyone is learning on the job and learning to work together and learning to bring in steady business to the company. There is the gap between strategy and proper implementation that every new business faces.
  2. foreign competition. There are too many foreign companies eying the entire globe. They are aggressively marketing their products to every corner of the earth, Nigeria inclusive, and this is driving down the share of the pie we can access.
  3. possibility on new local competitors. It is not safe to assume that we won't face strong local competition someday. And that someday could be tomorrow, next month or next year. We need to make hay while the sun shines on us and entrench our market grabbing strategy before it's too late.
And that's it for this fourth part in the series. Stay tuned for the next one.


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