Conduct a SWOT Analysis to Chart a Direction for Your Farm Business
Farming may be a way of life, but it’s also a business. Big business in many cases. Strategic planning plays a role in moving a business forward, and a SWOT analysis can be an important – and even fun – part of the planning process.
S-W-O-T is an acronym for strengths, weaknesses, opportunities, and threats.
“It’s a really simple tool,” says Jim Versweyveld, Farm Management outreach specialist for the University of Wisconsin-Madison, Division of Extension. “It’s an easy way to get everyone involved in your strategic planning process.”
Versweyveld recommends using a large whiteboard or similar surface that’s easy to write on or add Post-it notes to during the discussion. Divide the board into four quadrants and label as follows:
- Upper Left: Strengths. These positive attributes of your farm give it a competitive advantage and are inherent to your farm business.
- Upper Right: Weaknesses. The negative factors about your farm that ultimately detract from the strengths. Weaknesses are inherent, so they’re part of the nature of your farm business. You have some control over them but fixing weaknesses may come with a significant price tag.
- Bottom Left: Opportunities. External factors that potentially contribute to the success of your farm, but they’re not necessarily things you’ve done or can directly control.
- Bottom Right: Threats. External factors that you have little, if any, control over. Threats are negative circumstances that could affect your farm today or in the future.
A SWOT analysis can be completed independently, but Versweyveld strongly encourages farm managers to pull a group together to work through it.
“It can be anyone who knows your farm well and has a vested interest in your farm’s success. Your crops manager, a maintenance manager, your insurance agent, key employees, an accountant – anyone you work with who knows your farm well enough to have good, solid opinions about these four aspects of your farm,” says Versweyveld.
Have Fun with the Process
Once you’ve figured out who to ask to the group, the next part may just be the toughest: Getting the individuals to engage in the exercise.
“I can predict that the first time a farm business tries to do this, you may have some eye rolls as you start handing out markers and Post-it notes,” says Versweyveld. “You may have some skeptics in the group, but once this process gets started, people really do get into it.”
To get everyone involved, pass out a stack of Post-it notes and then give the group five or ten minutes to brainstorm about the farm. Then, put the notes in the appropriate categories.
With a diverse set of people, you’ll get different perspectives. This results in a broad view of the farming business, yielding ideas you might not expect. For example, a crops manager will offer a different perspective than your accountant, a family member or a partner in your business.
“That’s why there’s beauty in pulling a team together rather than doing these one-off or by yourself,” notes Versweyveld.
After everyone has an opportunity to contribute their thoughts, pull the notes off one at a time and stack together duplicates. Ideas that are repeated should be kept together and considered almost as a multiplier. There’s importance in the fact that multiple people identified the same ideas under the same category.
“I’d also encourage you to get everyone talking,” he adds. “If you’re unclear about what somebody wrote down, then stop and give them a chance to contribute. This can be a great tool to get your key employees involved, and it can make them feel that their opinions are valued as you’re moving your business forward.”
Versweyveld provided an example of a hypothetical farm going through the exercise, starting with brainstorming their strengths, which could be soil fertility, proximity to markets, easy access to highways, or any number of things about that farm that are positive.
Strengths also could be personal aspects. Having a son or daughter who’s interested in farming and potentially a succession plan for the business is a strength. Or a daughter-in-law or a son-in-law with a marketing degree could be viewed as a strength. This could be an opportunity to put a website together for your farm or advance some of your community outreach.
Weaknesses could be communication challenges, family members feeling stressed by wearing too many hats or a number of other issues.
“Maybe you love to be behind the wheel of the tractor, but when it’s time to sit down and do the books, that’s not your strength. So that would be indicated as a weakness,” explains Versweyveld.
For opportunities, maybe the farm is close to a metropolitan area. This provides plentiful and available rental land from absentee owners. But proximity to a city can be a threat as well if there are zoning changes. Also, conflict could potentially arise from neighbors who are less familiar with conventional farming practices.
“Categorize all of these, and then take a moment to step back and ponder, ‘Do these things make sense today? Will they make sense a year from now, three years, five years, and so on,’” asks Versweyveld.
Final Tips and Resources
For more information on how to conduct a SWOT analysis, Versweyveld provides a few final tips and online resources:
- Constant Growth: A SWOT shouldn’t be one and done. It lends itself to an annual, or even quarterly, review.
- Frequency Factors: How often you repeat the analysis depends on the amount of change you anticipate. You may want to repeat it more frequently if there’s a change in ownership, leadership, marketing strategies, or some other factor. The beauty of a SWOT analysis is that you can do it whenever you deem necessary.
- Best Time to Analyze: Winter months, between growing seasons, are a great time to do the analysis.
- Focus Areas: A SWOT analysis can be a holistic view of your entire farming business, or it can be a narrower focus. Maybe you’re thinking of a new crop or a new market, or you are considering some entrepreneurial avenue. Pinpoint the SWOT on that question or issue.
Helpful materials to conduct a SWOT analysis are available at farms.extension.wisc.edu.
To learn more about how a SWOT analysis can help your farm business planning, listen to our latest podcast episode.
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