A powerful tool to use while developing your business plan is a SWOT Analysis. Short for Strengths, Weaknesses, Opportunities and Threats, conducting a SWOT analysis forces you to examine internal factors – strengths and weaknesses – and identify external factors that could affect your business– opportunities and threats. From this exercise, you can uncover unique opportunities due to your strengths, and address your weaknesses to mitigate external threats.

A SWOT analysis most often examines overall business strategy. However, it can also focus on a particular aspect of your business: human resources, brand image, marketing activities, competition, new markets, product, industry, and more.

A business plan is a road map for your venture, showing where you are and where you want to go. It answers important questions such as market size, product price, and break-even point. It forces entrepreneurs to ask the hard questions, ensuring they are fully prepared to operate the business. It also aligns the entrepreneur’s vision for their business with the reality of the business environment.