Use These 3 Analysis Tools to Prepare a Killer Business Plan Writing a business plan doesn't have to be agonizing -- there can be some fun in doing it.
Opinions expressed by Entrepreneur contributors are their own.
Mission planning in the SEAL Teams always took one of two routes: deliberate or hasty. Deliberate planning assumed a longer term approach (greater than 48 hours) whereas hasty planning was for anything within a 24-hour period -- with some missions as soon as now.
While both planning methodologies entailed the same three criteria -- time, resources and requirements -- two significant differences determined which approach to use: the immediacy of the demand (essentially, the threat) imposed by the enemy (or competitor), and the accuracy of information we had to plan.
For the entrepreneur, it's tempting to vie for the hasty approach, be like Nike and "just do it," with hopes that your product will just take off into newfound success. Chances are, however, that it won't. At least, not without doing the due diligence that gathers enough information to formulate an impenetrable business plan.
To the extent that you can do a thorough, deliberate analysis of the industry, do it. There are tons of free tools that can guide you through the process. In the meantime, here are three simple business analysis tools to help you identify what distinguishes your brand from the rest:
Not to be confused with animals or people, PEST is a way to analyze the big picture changes within your industry to identify growth opportunities. Specifically, the acronym stands for:
- Political factors
- Economic factors
- Social factors
- Technological factors
Another variation of PEST is PESTLE, which includes the legal and environmental considerations. If you're stuck on where to begin, start by segmenting each factor into the five W's -- who, what, when, where, why -- then unleash the (mental) fury from there.
2. SWOT, the enhanced version
While PEST offers a macro-level view of the competitive landscape, SWOT is typically used at a more micro level to analyze a specific business, product or service. Here's the value of SWOT:
- Strengths. While the number of beers you can slam or the number of pushups you can crank out in 60 seconds are certainly enviable qualities (at least, they were when I was in college), competitive strengths are the advantageous skills, resources, capital, network or value that distinguishes your brand from all others. They are why consumers want you and you alone.
- Weaknesses. A pretty straightforward term. However, if you're unsure of what your weaknesses are, take your strengths, flip them upside down, and boom, there they are. Weaknesses are where your strengths fall short in comparison to your competitors'. These may be internal disadvantages within your company such as additional bureacracy or processes, or external weaknesses that fall prey to the market, economy or technology.
- Opportunities. This is where you leverage your strengths to exploit openings such as lower interest rates, competitor prices, seasonal changes or consumer trends.
- Threats. These are bad. They are the little guys who work for Murphy and impose his not-so-likable law. Of course, the opposite is true, too. Threats have a way of revealing your current state, they unearth the ill prepared and reveal them for what they are: developmental opportunities. We had a saying in the SEAL Teams: You don't rise to the occasion, you fall to the level of your training.
Here's the secret to maximizing the value of a SWOT analysis: Pit your strengths against your opportunities and use the result as leverage points to build greater value. Place your weaknesses against your threats and use the byproduct as defense points. This way, weaknesses don't diminish and strengths become stronger based on emerging opportunities.
3. 7S model
Unlike the aforementioned tools that are generally used for external analysis, the 7S model looks inward at your own company. Developed by McKinsey & Company, the seven S's of strategy, structure, systems, style, shared values, staff and skills demonstrate why organizations don't operate as a group of independent silos but rather as a network of interconnected parts.
Imagine an octagon and place an S at every vertice, except for "shared values." Shared values belongs in the center of the octagon because, well, they're shared. Now, draw a line from each vertice to another such that each S is connected to another and you see how each component is inextricably linked to another.
Writing a business plan doesn't have to be agonizing -- there can be some fun in doing it. More so, the simple act of writing out your business plan through the aforementioned perspectives will reveal previously unconsidered insights that will set you up for success.