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How to Do a Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis
by Marion Simon, Ph.D., State Specialist for Small Farm and Part-Time Farmers
Kentucky State University Cooperative Extension Program
The SWOT analysis identifies the farm’s internal strengths and weaknesses and examines the external opportunities and threats that the farm business faces. The SWOT analysis helps to provide direction for the farm business and serves as a basis for the farm’s business plans. Once all of the strengths, weaknesses, opportunities, and threats to the farming operation have been listed, the information should be combined and strategies developed. Draw up plans to take advantage of the strengths and opportunities, counter the threats if possible, and minimize or reduce the weaknesses. Pay close attention to strengths that can help the farming operation achieve its goals and objectives, and use the SWOT analysis to give an overall look at the current position of the operation. Then use the analysis to plan future strategies and to manage the farming operation. Develop strategies that will strengthen the weak areas or take advantage of the strengths and opportunities. Give close attention to developing strategies that focus or capitalize on the strengths of the operation.
Here are some sample questions and examples that fit each category:
Strengths
1. What does the operation do well? (marketing weaned kids, producing commercial breeding stock)?
2. What do other people (neighboring farmers, goat farmers, and county Extension agents) see as your strengths? (producing healthy weaned market kids, marketing show animals, excellent pasture)
3. What are the major sources of the farm’s revenue and profit? (show kids, weaned kids, commercial breeding goats)
4. What is the major focus of the farm operation? (weaned kids for sale at the auction or livestock sale, purebred breeding stock)
5. What is the market share of the farm? Of the organization (if you belong to, or market through, a producer association or cooperative)?
6. Is the farm’s marketing and advertising effective? (buyers indicate that they saw your farm on the Internet)
7. What made you start the goat operation? (kid prices at the stockyards)
- What were the motivating factors and influences? (kid prices, cost-share program, sale prices of purebred breeding stock, goats are easier to handle than cattle)
- Brush and weeds in abundance on the farm?
- Do these factors still represent some of your strengths?
8. Why do your customers buy from your farm? (consistent quality, petting zoo, advertising, show winnings)
9. What differentiates the operation in the market? (purebred Boers, processed products, show winnings, grades of the market kids)
10. What have been the most notable achievements? (weaning weights improved)
11. What relevant resources does the farm have? (forages, water resources, buildings)
12. Is the morale of the employees high? Are there incentives in place to reward employees for good work? (bonuses, extra paid leave, share of the profits)
13. What is the farm’s greatest asset? (forage base)
Weaknesses
1. What does the farming operation not do well? (direct marketing of show stock)
2. What do other farmers and Extension agents see as the farm’s weaknesses? (credit card debts, mixed and inconsistent weaned kids)
3. Are the weaning weights low?
4. Are the kidding rates low?
5. What should the farm avoid? (credit card debt)
6. What are the farm’s least profitable enterprises?
7. Is the operation “wandering”? (no direct focus or objective)
8. What is the biggest expense of the operation? (feed, veterinary supplies and fees)
9. Is the farm’s marketing/advertising effective? (buyers are only at the sale barn)
10. Will the farming operation be able to withstand price decreases or cycles?
11. Why do customers not buy from the farm? (disease was a problem two years ago)
12. What relevant resources does the farm need? (consistent water supply, rural water line)
13. Does the farm operate its inventories efficiently? (the farm’s goats in pasture number 1 have more foot rot/scald problems than the farm’s other pastures, family labor has off-farm jobs which caused problems during kidding season, family labor can only harvest hay on the weekends, 95% of the breeding does are aged)
14. Do the farm’s employees perform at their best? Are there reward incentives for good work? (bonuses, family incentives if only family labor)
15. Is labor short during kidding season?
Opportunities
1. What new technologies are available that the farm operation can use to lower costs or improve marketing? (improved forage varieties to extend seasons, tele-auctions)
2. What market trends are you observing? (prices and sales related to religious holidays)
3. What new relationships can the farm develop? (join an Internet marketing association)
4. Can the quality of products, operations, and inventory management be improved without incurring serious costs? (improved weaning weights through internal parasite control and hoof care)
5. Can a competitive edge be created over the farm’s competitors? (add a value-added product, add a performance-tested buck)
6. Is there an opportunity to demand better prices from suppliers? (allow the supplier to use the farm name in its advertising, put its name on the farm’s handling facility during a field day)
7. Is there an opportunity to receive higher prices for production? (improved weaning weights through better genetics)
8. Can the profitability be improved by reducing parasite loads and disease control through vaccinations?
9. Can the farming operation have more predictable cash flows? (diversify into selling excess hay to spread the sales periods, add a frozen value-added product)
10. What can the farm do that it is not currently doing to improve the operation? (add guard animals, do rotational grazing, add a performance-tested buck)
11. What new government policies and programs are available? (cost-share for watering systems, ponds, or fencing; rental of goats for grazing invasive plant species)
12. What interesting social patterns, population profiles, and lifestyle changes are occurring that could benefit the farming operation? (migration/immigration from traditional goat-consuming populations which increases the potential for local sales, increased use of goat sausages and cheeses in recipes, local Hispanic stores in the area)
13. What interesting local events might benefit the farming operation? (county fairs, “cook-offs,” farm field days, barbeques)
14. Availability of rental land to expand the enterprise?
Threats
1. Have there been any significant changes in the industry in which the farm operates? (U.S. Animal Identification Program, loss of a local USDA processing facility, new vaccination or testing programs)
2. What obstacles does the farming operation face? (lack of rural water system, drought, lack of state approval for goat milk processing and distribution, rural roads and bridges that create problems for trucks, the local creek annually floods a part of the farm)
3. What is the farm’s competition doing? (marketing breeding and show stock over the Internet)
4. Are there any, or do you anticipate any, new competitors in the farm’s market? (you estimate that 25 new breeders of show Boers will be located within 10 miles)
5. Are there any, including new, regulations in the industry that make it difficult to be profitable? (state approval for processing, collection, and sale of fresh goat milk or cheese does not exist, and the state regulatory system does not plan to implement one)
6. Are international or distant competitors taking/reducing the farm’s market share? (shipped imported frozen goat meat is now available in my town; it is much cheaper, and the local consumers of goat meat have switched from buying my kids to buying the imported product)
7. Is the farming operation keeping up with technological changes? (updated computers, software, and Internet)
8. Have margins been under pressure? (i.e., as in the beef cattle market at the bottom or low point of the price cycle; i.e., fuel prices have driven up the shipping costs to the market, but the sales price is the same; fuel costs forced hay costs to be higher)
9. Is changing technology threatening the farm’s profitability? (my buyers now purchase frozen products over the Internet)
10. Are there governmental (or farmer cooperative) decisions that affect the farm’s production or markets? (not repairing or widening local roads and bridges, environmental restrictions/regulations, free-trade agreements that allow frozen products to be shipped into your market)
11. Does the farm have bad debt or cash-flow problems? (credit card debts)
12. Are the employees adequately trained and motivated? (employees physically work harder but make less than their friends at the local fast food restaurant)
13. Could any of the farm’s weaknesses seriously threaten the operation? (the dairy cooperative decides to drop the milk route because the roads are inaccessible during bad weather and the farm has 200 producing does)
14. Do state health regulations limit the direct sales of goat meat or milk?
References
“Risk-Assessed Business Planning for Small Producers” curriculum developed by a joint project of 1890 Land-Grant Institutions, USDA-CSREES, and the SRRMEC (funded project collaborators: Marion Simon, Daniel Lyons, and Nelson Daniels), authors of the manual: Stan Bevers, Brenda Duckworth, Blake Bennett, Rob Borchardt, Nelson Daniels, and Allen Malone (Texas A&M University and Prairie View A&M University).
Marion Simon, Farm Business Planning chapter, Meat Goat Production Handbook, Langston University, OK, ISBN 1-880667-04-5, pp. 313-326.
Marion Simon, Farm Business Planning section, Web-Based Training and Certification Program for Meat Goat Producers, Langston University, OK.