SWOT analysis is important to businesses but some farmers and farm businesses do not see the need to conduct a SWOT analysis, and even when they want to, do not know how.
The farming business is a business that requires proper planning and research. For starters, it is not a money-spinning venture right off the bat like some would have you believe. It is in fact, one of the industries that you need to know what you are doing if you don’t want to lose all your money in one cycle.
So, if your plan is to grow your farm business, it is important you conduct a SWOT Analysis. According to Wikipedia, a SWOT Analysis is an acronym for strengths, weaknesses, opportunities, and threats and is a structured planning method that evaluates those four elements of an organization.
Why Should You Conduct a SWOT Analysis?
You should conduct a SWOT analysis to examine your farm’s internal strengths and weaknesses, and its external opportunities and threats.
When Should You Conduct a SWOT Analysis?
Farmers should conduct a SWOT Analysis of their farm business when they are experiencing fast growth or if there is an increase in demand for your products.
Farmers should also conduct a SWOT analysis when their farms are ready for a new phase of growth. This growth can come in form of raising money from different sources, hiring labor, acquiring new farms, and planting new crops.
A SWOT analysis can also be conducted if things are not quite right with your farm business, for example, an outbreak on your farm or securing new agro-processors.
You can also do a SWOT analysis before you start your agribusiness. It will help you determine if threats outweigh opportunities presented by that business and if the business strengths balance out the weakness.
How To Conduct a SWOT Analysis?
The following steps will guide you in conducting your SWOT Analysis:
1. Start Out With Your Goal:
There are four elements of a SWOT Analysis and each of this element will help you grow your business but one of the element may require more attention from you than the other.
Also, if your farm business is just starting out, you may find it overwhelming to focus all your resources on all four areas at the same time, so you need to decide what your capacity is and which areas of the SWOT analysis you will be focusing on.
2. Plan to Review:
Your SWOT analysis is not a set -it and forget-it document. It is a document that you should review quarterly or annually with your staff.
3. Identify Strengths
Identifying your strengths in agriculture is the first step in identifying your SWOT analysis. If its a potential business idea, your strength may be the personal network you have built over the years or the expertise you are bringing into the business.
As an established business, strengths may be strategic partnerships, customers trust, thought leadership, awards, team, your team’s personal achievements, business mentors or a good line of credit with the bank.
Capitalize: Once you identify your strengths, it is time is to decide on which of the strengths to capitalize on and how. For example, you can capitalize on your team’s personal achievements and experience when raising money for your farm business.
No business is without its weaknesses and the earlier you realize that the faster you can proffer solutions to these weaknesses.
A new farm business weakness may be the lack of experience in dealing with suppliers or not having structured farm processes.
For an established business, the weakness may be securing new investment, having little to no resources for research and development or poor decision making.
Improve or Eliminate: these are the two actions you can take once you identify the farm’s weaknesses. Inadequate preparation (e.g. unorganized finances) can be a major reason why your business is unable to secure new investment, so to improve this, you will have to get your cash flow statements in order.
On the other hand, if someone on your team is constantly making bad decisions that is costing your company, it may be time to let them go.
“Demand for cassava outweighs supply.” “cherry season is here.” “there is a new yam variety that increases yield per hectare.”
You can only take advantage of these opportunities if you are aware of them, so identify the opportunities that are available to your farm business and go for them.
Work: identifying the opportunities is only the first step. You need to devise a plan to work these opportunities.
I cannot stress how important it is to identify the threats to your business. Threats for farm businesses can be uninsured farms, disease outbreak, stealing of farm products, returns on shipped farm products or the launch of a new product from your competitor
Monitor: The best way to deal with threats is to predict (when possible), monitor them and arch a plan to deal with threats as they arise. Having a plan will ensure that you are (almost) always prepared for surprises.
Conducting a SWOT analysis will strengthen your farm business, reduce your risk profile and help you take advantage of the right opportunities.
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