Whatever You Do… Don’t Add That SWOT Analysis Into Your Business Plan
When you’re putting together a business plan to present to potential investors, you will be inclined to do almost anything to improve the odds of getting them on board. So you spend countless hours refining it and addressing their main concerns.
One thing I see people add into their business plans is a SWOT analysis. It’s a cute tool that helps organize our thinking to make sense of our internal (Strengths and Weaknesses) and external (Opportunities and Threats) environments. Plus the name is catchy and cool because it sounds like SWAT.
But sticking a SWOT analysis into your business plan will hurt you more than help you. Yes, and here’s why:
1- It misses the point: You should be presenting how you will run the business, not showing off what you know.
2- It screams “Beginner”: It’s a useful learning tool, which is the problem. Adding it into your plan is like wearing a t-shirt saying “Trainee”. It’s like counting your steps while auditioning for a dance role. It’s like showing up to a Tour De France with training wheels on your bike. I can go on, but you get the idea. Investors might sympathize with you and some might let it pass, but they will put their money with someone solid.
3- It’s redundant: You are already doing it in your business plan anyway. When doing the analysis section (market, industry and competitive analysis), you will be discussing opportunities and threats (external analysis). In your action plan (people, operations, marketing, sales) you are covering the internal analysis of strengths and weaknesses (e.g. what’s unique about your business). It’s just a matter of dropping the label.
4- It’s an empty shell for start-ups: If you haven’t started your business yet, there isn’t much to cover in your internal analysis anyway. You still don’t have anything to evaluate so whatever you come up with will be generic. For example, you will end up saying “we will have great customer service” but won’t have any figures to back that up.
So skip that part from your business plan. Spend your time and energy on something that adds value instead. At the same time, you will be saving the investors’ time.
Here is a business plan template if you are in the process of building a plan for your company or department.