You’re reading this in 2020, which means that we’ve turned our calendars for the last time for 2019, and we’ve passed into a new decade! With any new year, there are grand plans of going to the gym, drinking less, eating more vegetables, and so on—and while those are great goals, they mean little and might not get accomplished if there’s no plan behind them. The same can be said of your operation. Maybe 2020 is the year you want to expand your herd, pay off debt, or finally replace that fence line that keeps coming down. Whatever the goal is, if there’s no plan to get it done, it will fall by the wayside of “someday.” The best way to develop a plan to reach your goals is to figure out your operation’s baseline. Where is it now?
Strengths, Weaknesses, Opportunities, Threats (SWOT)
A SWOT analysis is something that you can sit down and complete during this first month or so of 2020 so that you can set your operation up for success as we move into the more hectic times that spring brings. I believe that a SWOT Analysis is essential, not only for your operation, but for yourself. Agriculture is notorious for being stressful, and I know we can all attest to that with what Mother Nature threw at us in 2019. How did going through 2019 feel? Did it feel like your operation was just surviving? Was your stress level at an all-time high? What were the effects on your family? Reflection and analysis is hard, really hard—but we don’t learn from our experiences, we learn from reflecting on our experiences.
The purpose of a SWOT analysis is to identify internal and external trends, whether they are positive or negative, helpful or harmful to your operation. Completing a SWOT also allows you and your team members (family, business partners, etc.) to identify the environmental, physical, and political climate of the farm business—maybe everyone is on the same page with the conservation strategy and doing the EQIP program, but maybe your son isn’t too keen on how the new hired man does things. Once you complete a SWOT analysis, you can determine if something will assist your operation in achieving the goals you set for it (a strength or opportunity) or if there’s an obstacle to overcome or minimize to achieve your goals (a weakness or threat).
Strengths and Weaknesses
The first two parts of a SWOT analysis, strengths and weaknesses, typically focus on the inner workings of your operation—these are things that are typically within your control. Strengths help you carry out your operation’s vision, while weaknesses are the exact opposite—they are deficiencies in competencies and resources that limit how far your operation can carry out its vision. Some examples of strengths could be that your operation practices low-stress animal handling and that your wife has an accounting degree, so she’s able to handle the books. Weaknesses could be that there is no transition plan in place for when you need to pass the operation to your children, or that your off-ranch sister is asking for a bigger check at the end of the year. Below are some prompts to get you thinking about your operation’s strengths and weaknesses.
Questions to help you reflect on operation strengths:
- What strengths does your operation have that makes you competitive?
- Is the morale of your family and employees high?
- What natural resources does the ranch have?
- What do your customers see as your strengths? Why do they buy from you? (Don’t be afraid to ask!)
Questions to help you reflect on operation weaknesses:
- What could you improve?
- What do competitors do better or differently than you?
- What resources are lacking? What needs to be developed more?
- What enterprise is least-profitable?
Opportunities and Threats
The last two parts of a SWOT analysis, opportunities and threats, require you to step outside your operation and look at it from an outsider’s perspective. These are issues that you cannot control, but you can develop management strategies to enhance or reduce their impact to your operation. Opportunities are external positive circumstances, while threats are external negative circumstances that affect your operation. An opportunity could be that a new processing facility is opening in your area, which means that your trucking costs will likely decrease, or you may live close to a large metropolitan area with consumers that want local meat. Threats could be that an out-of-state owner just bought up the sections around your place, so you feel hemmed in, or there could be a threat from key relationships that are floundering—between yourself and your spouse, or between you and your ranch hand. Whatever the threat, you should work to develop a plan to resolve the problem, or find ways to practice acceptance. Below are some prompts to get you thinking about your operation's opportunities and threats.
Questions to help you reflect on operation opportunities:
- Are there new technologies that you can use to lower costs?
- What networking can I develop further to leverage for my operation?
- Are there new government policies or programs that will help me achieve my goals and improve my operation?
- Is there a new consumer ‘trend’ that is predicted to be around for a long time? What ways could I capitalize on that?
Questions to help you reflect on operation threats:
- What new regulations do I need to be aware of? How will they impact me?
- Do I have bad debt or problems with cash flow?
- Are all of my employees appropriately trained and motivated?
- Is the operation producing too many different commodities? Do we need to focus more?
Remember, there are no set guidelines for completing a SWOT analysis. It serves as one starting place for looking at your operation holistically. Completing a SWOT analysis allows you to evaluate the current position of your operation and decide on management strategies that will help you achieve your goals for 2020. Doing this now at the beginning of the year can help you get out of a “survival mode” and into a “strategic mode." Are you ready to make some changes?
- Ohio State University Extension. Conducting a SWOT Analysis of Your Agricultural Business. Chris Zoller and Chris Bruynis.
- University of Wisconsin – Madison, Extension. Assess your Farm Business using a SWOT Analysis.