A time-tested methodology for business
The SWOT approach to reviewing, managing, and forecasting a business is a time-tested methodology. It has been used in many businesses as a strategic way to achieve a good, clear-eyed vision of the operation and is equally applicable to your farm or ranch enterprise.
SWOT is represented by four key components:
Strengths of your operation – What’s working? What is market-attractive, and what products or services are top sellers for your farm? The strengths should claim a significant part of your time and resources when it comes to maximizing profits. Strengths should also focus on the unique assets you bring to the table. Your staff, your family, and others make up your business team. They can be a huge strength to the ongoing farm. There are other strong areas within a business that should be addressed and documented. These can include quality, maintained equipment, superior land resources, and many other areas that bring stability to your business.
Weaknesses are also a part of a business or ag operation. We should acknowledge these areas so we can focus on correcting areas where we are able. For some, it’s bookkeeping or deferred maintenance. Maybe it’s a lack of key personnel to fill a much-needed position on staff. Is your marketing plan working for you? Weaknesses usually have solutions available to correct the issue(s). Don’t be afraid to recognize and address these so they don’t grow and become unmanageable.
Opportunities exist for any farm or ranch business. This is a time to really open your mind to other possibilities. Is there a way to offer an ag-tourism piece to your farm? How about direct farm-to-table and farm-to-customer marketing? These are not just trendy anymore. They’re an exciting part of our renewed desire to know where our food and fiber come from. They can represent a significant part of your profit center while being cost-effective. They don’t have to materially change the rest of your farm. Assign the appropriate team members and identify the best seasonal opportunities to enhance your business. It can bring fun and excitement to your team.
Threats exist to your enterprise as well. It’s best to identify and acknowledge these areas. Then, we can collectively find ways to address them by an initiative-taking approach. Threats can come from competitors, market conditions, and even internally in some cases. It’s critical to take an assertive, open-minded look at what is threatening to your business.
All of these examples are just that, examples. I suggest you compile your team using this as priority one and truly devote some time and attention to these areas. Ask your team members to think through these four areas ahead of time and come to the meeting with thoughts, concepts and ideas.
To actively address this business approach is to involve all key parties and really “lay it on the table” regarding what works and what doesn’t for your particular operation. The more ideas, the better so managers can filter through these and make good, strategic decisions as a result.
Keep an open-minded approach to the SWOT meeting and allow for even far-reaching ideas to surface. Who knows where this may lead? Your farm or ranch will be the better for it!
Ken W. Knies is an agricultural and rural consultant. He holds a bachelor’s of science and arts from the University of Arkansas and a master’s of business administration from Webster University in St. Louis, Mo. He formed Ag Strategies, LLC as a business unit focused on quality borrowers and lenders.
