No one gets into farming because they want to get rich, lol. But at the same time a farm is still a business, and a business needs to at least break even–if not earn a profit. Conducting a SWOT analysis of your farm-business annually can help you to determine what’s working for you and what’s not.
What is SWOT?
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is a business planning tool that you can use to help identify these key components of your business by asking yourself questions and breaking the answers up into these categories.
Why should you SWOT?
A SWOT analysis can help to provide direction and serves as a basis for the farm’s business plans. It enables you to find and identify competitive advantages by matching strengths to opportunities. You can pin-point areas of weakness or potential threats to your business and convert them into strengths or opportunities too. And if it is not possible to convert threats and weaknesses, at the very least you will be able to strategize a way to minimize or avoid them.
All of this translates into a clearer direction for your business that will produce a more successful and productive farming operation.
How to SWOT
Get some paper and sit down with a pen and write out the four categories: Strengths, Weaknesses, Opportunities, and Threats. Now ask yourself a series of questions for each category, brainstorm and jot down your answers. Here are some possible questions:
Your farm’s strengths
- What made you start farming? (It’s important to remember the driving force behind your business–it can keep you grounded and provide direction).
- What does your farm do well?
- What is your farm’s main focus?
- What have been your most notable achievements?
- What are your major sources of profit?
- Why do your customers buy from Runamuk?
- What sets you and your farm apart from others?
- What resources do you have available?
- What is your greatest asset?
Weaknesses:
- What does your farm not do well?
- What are your least profitable enterprises?
- What is your biggest expense?
- What resources does the farm need?
- What might other farmers see as your farm’s weaknesses?
- What should you avoid?
Opportunities
- What technologies are available that you might use to lower costs and/or improve marketing?
- Can the farm have more predictable cash flows?
- What market trends have you observed?
- What new relationships can the farm develop?
- What local events might benefit the farm? (annual fairs or festivals, etc.)
- Are there industry promotional events that you can take part in? (for example: Maine Maple Sunday, Open Farm Day, etc.)
- Can profitability be improved? How?
Threats
- Have there been any significant changes to the industry?
- Do you have competitors reducing the farm’s market share?
- What are the obstacles to your farming operation?
- Does the farm have bad debt or cash-flow problems?
- Could any of the farm’s weaknesses seriously threaten the operation?
These are the questions that I asked myself when I did my own SWOT analysis (which you can see here). The answers will vary from farmer to farmer because every farm is as unique as the person farming it. There are many different types of farms–from apple orchards to dairy farms to vegetable farms, and a spectrum a methods for each. There is always something we are struggling with, and there’s always room for improvement. Hopefully this list helps you to brainstorm and analyze your own operation so that you can be more productive ans successful this year than last.
Be sure to ask for the input of everyone who works the farm–be they family members, or paid employees or even volunteers. It’s helpful to gain the perspective of others.
Now what?
Once the key components of your operation have been identified and categorized the information can be combined and strategies can be created. Use the information you have gathered to draw up plans that take advantage of your farm’s strengths and the opportunities you identified. Develop plans that counter the threats you foresee, and establish goals or guidelines that will help to strengthen your weak areas.
This becomes your business plan for the year. Revisit it seasonally to be sure you are adhering to the plan you outlined, but feel free make adjustments as needed–sometimes what we looks like a good strategy in February or March, may not be working so well come August. Any number of issues can throw a monkey-wrench into the workings of your operation–from a broken valve on your tractor that costs a couple of thousand to replace to an unexpected accident. And then there’s the fact that much of farming is entirely dependent upon nature. A pest problem may threaten your most valuable crop, the weather may not cooperate, or perhaps there’s a shortage of available crop-seed. Farmers need to be organized like any business, but we also need to be flexible enough to deal with the challenges that Mother Nature throws at us.
What do you think? Any experienced farmers out there with insight to contribute to beginning farmers everywhere? Please feel free to share your thoughts and comments below!
Resources
Conducting a SWOT Analysis of Your Agricultural Business – a pdf fact-sheet from Ohio State University.
How to Do a SWOT Analysis – provided by the eXtension service.
Performing a SWOT Analysis – from the Penn State Extension.
SWOT Analysis; a tool for making better business decisions – printable pdf offered by the USDA’s Risk Management Agency.
