The SWOT Analysis BEFORE you buy
In our post in July we wrote about how to Buy Well when it comes to buying a businesses. Now you’ve found what looks like the ideal business to buy, you’re about to put an offer in. About now, undertaking a SWOT analysis as part of your due diligence before you go unconditional could save you thousands of dollars and give you a wider appreciation of what you are about to leap into.
WHAT’S A SWOT ANALYSIS?
It’s a sound business tool that’s used to highlight the key issues and features of a business, and the environment it operates in. A SWOT analysis gives you a focus for areas you need to concentrate on. It’s part of your strategic analysis.
A SWOT analysis gets you to ask FOUR questions. What are they:
• Key Strengths of this business?
• Key Weaknesses of this business?
• Main Opportunities for this business?
• Main Threats to this business?
Strengths and Weaknesses relate to the business itself. Opportunities and Threats can also refer to issues outside the business.
Sit alone, put your detective hat on and start your thinking under each question. After you’ve done your solo part, ask questions of others in the industry, consider the SWOT of competitors, ask your advisers, your friends and the people currently working for the business. Even ask Google! The more information you can gather, the more knowledge you have to make an informed decision about one of the largest purchases you may ever make. Here are some ideas to get you started:
• What are the key products or services sold?
• What does this business do well?
• What key skills and capabilities are held within the business?
• What are the things this business has going for it?
• What is its USP – it’s Unique Selling Proposition?
• What is the business’s reputation?
• What are the areas the business may struggle in?
• What aspects of the business don’t appear right, or don’t make sense?
• What needs attention?
• What can be improved on?
• Where can you go with this business if you make some changes?
• How can you put your own personality into it?
• What new products and services you can add or develop?
• What can you do to improve performance?
• What efficiencies can you gain with the current systems/processes?
• What can you do that is not being done now?
• What are the issues that could threaten the business’s financial situation?
• What are the significant changes in this industry that could occur?
• What is changing in the wider marketplace?
• What are the competitors doing, who are they and where are they?
A careful SWOT analysis will alert you to important issues to consider during your due diligence phase of checking the business with eyes wide open before you fully commit to buying it. Remember that “a business which fails to plan, plans to fail”. For help with a SWOT analysis, due diligence and all things business give the experts Ben Blackler and Blair Smith a call for an obligation free chat. Call us on 04 555 9090.
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