Starting A Home Based Business - SWOT Analysis
Researching Your Online Business Idea - SWOT Analysis
Once you've decided to start an online business, your next step is to do some research to validate to yourself that your idea is a good one. Or, perhaps you have several ideas that you need to decide upon. Either way, you've got to do a bit of research to help you determine whether it's going to be worth it to you to leave your job, start out on a part time basis, or abandon a particular idea.
I use three different methods in making these determinations.
1. Informal Research
2. SWOT Analysis
3. Feasibility Study
In this article, I'm going to discuss the second one that I use - SWOT Analysis.
The SWOT Analysis stands for Strengths, Weaknesses, Opportunities & Threats. Major companies use this method all the time for a host of different reasons. The biggest reason this analysis is used is for product development. But this very simple analysis is ideal for a comprehensive review of your online business idea.
This method involves creating a chart on a blank piece of paper. Here's what you'll need to do:
1. Draw A Cross On A Piece Of Paper.
This will leave you with 4 boxes.
2. Label the upper left box "Strengths"
3. Label the upper right box "Weaknesses"
4. Label the lower left box as "Opportunities"
5. Label the lower right box as "Threats"
Once this is done, fill in the various boxes with things that impact or could contribute to each of the four SWOT categories.
Strengths and Weaknesses are internal factors that control or contribute in a good or bad way to your business idea. Opportunities and Threats are external factors that are impacted by the environment - or those that are outside of your immediate control.
The next step in the process will be to analyze the things you have written down. Asking yourself the questions below will get you started on the right path in working through your SWOT analysis.
Strengths
* Do I have the necessary knowledge in this business or industry?
* Is my idea patentable?
* What are the advantages of this product or service?
Weaknesses
* How difficult will it be to secure suppliers?
* Will I be learning about this industry from scratch?
* What kind of investment is going no be needed to develop my product or service?
Opportunities
* Is my idea in demand at this time, or will it be in the near future?
* Am I taking advantage of a current or new technology?
* Have changes in governmental policy, law or regulatory adjustments made this product or service a necessity?
Threats
* What is the competition for my product or service? If there is competition, is it established?
* Will my pricing be competitive with my competition?
* Is there a chance that technology will render my product or service useless?
After this analysis, review all four of the areas to see which areas have the largest number of, or most significant factors. When looking at the strength and opportunities, realize that they are good a good indication of the advantages you may have in the marketplace once you open your online business. Hopefully these advantages outweigh the weaknesses and challenges. After completing this exercise, I hope it's become clear to you how important it is to offset the disadvantages in order for your online business to have a shot at being successful.
However this analysis has worked out, you should certainly have a solid idea of how good your idea for an online business is. The SWOT analysis can really be a big help in building a solid foundation, or it can end up saving you a lot of time, money and effort if the analysis points to this particular idea not being solid enough to build a business on. If this is the case, don't give up! Simply move on to another idea and go through the process again.
Once you've decided to start an online business, your next step is to do some research to validate to yourself that your idea is a good one. Or, perhaps you have several ideas that you need to decide upon. Either way, you've got to do a bit of research to help you determine whether it's going to be worth it to you to leave your job, start out on a part time basis, or abandon a particular idea.
I use three different methods in making these determinations.
1. Informal Research
2. SWOT Analysis
3. Feasibility Study
In this article, I'm going to discuss the second one that I use - SWOT Analysis.
The SWOT Analysis stands for Strengths, Weaknesses, Opportunities & Threats. Major companies use this method all the time for a host of different reasons. The biggest reason this analysis is used is for product development. But this very simple analysis is ideal for a comprehensive review of your online business idea.
This method involves creating a chart on a blank piece of paper. Here's what you'll need to do:
1. Draw A Cross On A Piece Of Paper.
This will leave you with 4 boxes.
2. Label the upper left box "Strengths"
3. Label the upper right box "Weaknesses"
4. Label the lower left box as "Opportunities"
5. Label the lower right box as "Threats"
Once this is done, fill in the various boxes with things that impact or could contribute to each of the four SWOT categories.
Strengths and Weaknesses are internal factors that control or contribute in a good or bad way to your business idea. Opportunities and Threats are external factors that are impacted by the environment - or those that are outside of your immediate control.
The next step in the process will be to analyze the things you have written down. Asking yourself the questions below will get you started on the right path in working through your SWOT analysis.
Strengths
* Do I have the necessary knowledge in this business or industry?
* Is my idea patentable?
* What are the advantages of this product or service?
Weaknesses
* How difficult will it be to secure suppliers?
* Will I be learning about this industry from scratch?
* What kind of investment is going no be needed to develop my product or service?
Opportunities
* Is my idea in demand at this time, or will it be in the near future?
* Am I taking advantage of a current or new technology?
* Have changes in governmental policy, law or regulatory adjustments made this product or service a necessity?
Threats
* What is the competition for my product or service? If there is competition, is it established?
* Will my pricing be competitive with my competition?
* Is there a chance that technology will render my product or service useless?
After this analysis, review all four of the areas to see which areas have the largest number of, or most significant factors. When looking at the strength and opportunities, realize that they are good a good indication of the advantages you may have in the marketplace once you open your online business. Hopefully these advantages outweigh the weaknesses and challenges. After completing this exercise, I hope it's become clear to you how important it is to offset the disadvantages in order for your online business to have a shot at being successful.
However this analysis has worked out, you should certainly have a solid idea of how good your idea for an online business is. The SWOT analysis can really be a big help in building a solid foundation, or it can end up saving you a lot of time, money and effort if the analysis points to this particular idea not being solid enough to build a business on. If this is the case, don't give up! Simply move on to another idea and go through the process again.
