The SWOT vs. the Risk Analysis

Posted by on October 22, 2009 in Business Start Up Advice [ 0 Comments ]

Many business plan writers and entrepreneurs have engaged in heated debates as to whether a business plan should include both a SWOT and risk analysis. The SWOT tool assesses the strengths, weaknesses, opportunities, and threats of your new or existing businesses, whereas the risk analysis looks at the risks faced by your venture and how you intend to overcome those obstacles. When looking at the entire business plan, the competitive overview, competitive advantages (of your business), risk analysis, and SWOT analysis seem too much of the same thing. This begs the question, how redundant should business plans be?

As a business plan writer and editor, I argue that is critical to demonstrate your knowledge of competition and what your businesses will or does face in the marketplace with regard to threats and how your advantages will supersede any barriers that may exist. When writing a business plan, I make it a priority to recognize the risks in the marketplace concerning such topics as the political, operational, technical, procedural, and technical areas surrounding your business. A great online tool to guide your risk analysis is Mind Tools.

Considerable time, research, and thought are needed to create the both management tools. SWOT and risk analysis can be thrown in to spruce up the appearance of your plan, but it is pertinent that these are formulated with an ardent knowledge of what your business is truly up against. Whether that means incorporating both management tools in the business plan document, they should only be implemented and put in the plan if redundancy is not a factor. Let’s face it: no one wants to read pages and pages of the same thing.

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