Conducting a SWOT Analysis of Your Agricultural Business

Building for the Successful Transition of Your Agricultural Business Series
ANR-42
Agriculture and Natural Resources
Date: 
04/06/2018
Chris Zoller, Extension Educator, Agriculture and Natural Resources, Tuscarawas County
Chris Bruynis, Extension Educator, Agriculture and Natural Resources, Ross County

Many large businesses conduct an analysis to identify the Strengths, Weaknesses, Opportunities, and Threats (SWOT) of their business in order to keep pace with the competition. You may not consider yourself a large corporation, but completing a regular SWOT analysis of your farm or agricultural business can be beneficial to keep you competitive. It may sound like a difficult task to complete, but it does not have to be. The following paragraphs help explain what a SWOT analysis involves and how to complete this process.

Strengths and Weaknesses

The first two sections of the SWOT analysis usually examine the internal workings of your farm business. These items are usually within the control of the business owners. One example could be future management of the business. Is there a next generation owner/manager who has the interest in the business and the ability to manage the complexities of the business? Another example could be the financial position of the business. Does the farm business have too much debt held as short-term? Here are some sample questions that can be asked to assist in determining your business’ strengths and weaknesses.

Strengths

  • What strengths does your business have that make you competitive? Examples might include family, labor, machinery, farm size, etc.
  • What do you do better than anyone else? Are you a better marketer? Are you a well-respected employer? Are you able to complete planting and harvesting duties efficiently?
  • What do your customers see as your strengths? Ask your customers what they think.

Weaknesses

  • What could you improve? What is holding you back? What little changes might make big impacts?
  • What should you avoid? Have you completed a financial analysis of your business to evaluate enterprises?
  • What do your competitors do better than you? You can work to be better than the competition, but in some cases you may be better off to fulfill a need they are not meeting.

Opportunities and Threats

The second part of the SWOT analysis requires you to look outside your business at issues that you cannot control but can manage to enhance or reduce their impact on your business. An example for a livestock producer could be the development of the neighboring farm into single-family housing units. Here are some sample questions that can be asked to assist in determining opportunities and threats to your business. 

Opportunities

  • What trends are facing your business? Will you have to increase in size to remain competitive or can you remain at your present size?
  • What is happening in your community that can be advantageous? Are new livestock facilities coming to your area that could provide a new market for crops you grow and sell? Is there an opportunity to market directly to local consumers? Is there a niche market?

Threats

  • What obstacles do you face?
  • What is your competition doing?
  • Do changes in technology threaten your business?
  • Does your financial position threaten your business?
  • Could any particular weakness seriously threaten your farm?

Who Should You Involve?

Generally speaking, the people most directly involved with the business should participate in a SWOT analysis. This would include family members employed in the business and hired employees. Input from outside advisors, such as your attorney, banker, Extension educator, or accountant, may also be helpful as they may see your farm from a different perspective.

Depending on the type of farm you have, asking customers their opinions can prove useful. Asking spouses, even if they are not employed in the business, for their opinions and perspective is critical. Involving them may provide a different perspective and help the business achieve its goals. Not involving spouses can potentially do more harm to the family and the business.

Next Steps

Completing a SWOT analysis of your farm business is the first step in strategic planning. (A form for doing the SWOT analysis appears on the following page.) The process should help you identify areas where your strengths and opportunities align with a high probability of success. Conversely, you will also identify combinations of weaknesses and threats. Your strategic plan should avoid these areas or at least provide for methods to minimize their effects on your farm business.

The SWOT analysis is not something you do one time and place on a shelf to collect dust. At least once a year, complete a new analysis. You may find little change has occurred, but it is still a good idea to review achievements, measure production efficiencies, and evaluate alternatives.

Acknowledgments

This fact sheet was developed as a result of a grant received by Ohio State University Extension from the North Central Risk Management Education Center, 2006-2007. Reviewer of this fact sheet was Bruce Clevenger, Extension Educator, Agriculture and Natural Resources/Community Development, Defiance County.

Reviewer of this fact sheet was Bruce Clevenger, Extension Educator, Agriculture and Natural Resources/Community Development, Defiance County.

 

Completing Your SWOT Analysis

In the space provided, list the strengths, weaknesses, opportunities, and threats for your farm business. Once you have listed all the items you can think of, prioritize each category. Use this information in developing a strategic business plan to help your business remain competitive.

Strengths

 

 

 

Weaknesses

 

 

 

Opportunities

 

 

 

Threats