SWOT ANALYSIS is an important tool successful family businesses use to understand how their organization is set up to deal with change.

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SWOT ANALYSIS is a simple exercise that can be done using just a sheet of paper and a pencil. SWOT stands for Strengths, Weaknesses, Opportunities and Threats that can impact a family business.

“SWOT ANALYSIS is an important tool for successful family businesses,” suggests Don Schwerzler of Atlanta-based Family Business Institute and their on-line organization Family Business Experts. “The SWOT ANALYSIS page is one of the more popular sections on our web site. We recommend 160 Key Business Questions to use in doing a SWOT ANALYSIS,” notes Schwerzler.

SWOT ANALYSIS provides insight at a point in time - like a snapshot. Also like a snapshot, it can provide a different picture depending upon what it is focused on. In your family business, you might focus one view on the business as a whole; another view of one operating division; yet another view of one sales territory.

SWOT ANALYSIS is simple to do and can be done using just a pencil and a piece of paper! To do a SWOT ANALYSIS, start by dividing a page into four quadrants with a vertical line and a horizontal line.

The top two SWOT ANALYSIS quadrants are Strengths and Weaknesses. The bottom two quadrants are Opportunities and Threats:

Strengths     Weaknesses

Opportunities    Threats

In the first box of this SWOT ANALYSIS, list all the strengths of your family business, operating division, sales territory or whatever you are analyzing. This isn't the time for modesty. One of the strengths you take for granted might be something that your customers value and that your competition doesn't have or do. Brainstorm. Write down words that characterize your business. You can edit later.

In the top right box list weaknesses - things you don't have, things you cannot do, things you don't do well. This is the time for brutal honesty - you are not producing a selling document so there is no point in fooling yourself. But also a time for realism... sure, you don't have a billion dollars, and you aren't likely to get it soon, nor could you do well with it if you did get it... so stick within the realm of reason.

The lower left box is for opportunities. What is the market NOT doing, what are your competitors NOT doing - what does the market need that you could perhaps provide? Think in terms of what would benefit your customer - cheaper, easier, more convenient, faster...

Lower right is for threats - what do you see that could make you obsolete; that could wipe you out. What are your competitors doing that will change things for you? What about new technology or consolidation that is changing your industry?

Schwerzler points out “the top two [Strengths and Weaknesses] relate to matters that are INTERNAL to your family business, while the bottom two [Opportunities and Threats] relate to EXTERNAL matters.”

A couple of hints:

· Keep It Simple, Sam - not too much detail in a SWOT analysis - it is a snapshot so stick to the big picture. [You might have some items that will warrant deeper study after the analysis.]

· Beware of paralysis by analysis or the ready-aim-ready-aim syndrome

· You aren't perfect predictors who know everything about the future, so just try to capture what you do know

"Family business owners can have other family members and key non-family managers do a SWOT ANALYSIS - then compare! It can provide some very interesting insights into how your business may be dealing with change.

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Don Schwerzler
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