Swot Analysis to Develop Strategy Essay

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A SWOT analysis is a means of understanding both the internal and external environments in which an organization operates (MindTools, 2017). It is commonly used as a means of strategy formulation, to help firms understand how they can use their strengths to take advantage of opportunities in the market, and to shore up their weaknesses to defend against external threats. To that end, it is worth analyzing the internal and external environments of 3 Squares, the meal delivery service for seniors, in order to see where the best market opportunities lie, and what challenges the company is going to face.

Strengths



There are a few different strengths that the company has internally. 3 Squares has a strong business plan. It has researched the market, and identified that there is an opportunity in providing food delivery for seniors. This is a growing market, and one that only has some competition. It is believed that there is room not only for more competitors but that the market will continue to grow, due to the demographic shift. The business plan takes into consideration the cost structure of the proposed business, and has identified that this business can be pursued profitability. Further, the business plan provides the needed structure for the company to start to prepare for business launch, and it also provides the means by which the owners can approach potential sources of financing and demonstrate to them that there is a viable business here (Root, 2017.



The second strength is that the people behind the company have the necessary skills needed to execute the plan. There are business skills that the principles have acquired in business school. Such skills help to inform the principals about what they need to do in terms of accounting, production management, marketing and other aspects of the business. Having these basic skills serves two main purposes. First, these skills mean that the principals are able to leave no stone unturned -- attention can be paid to all aspects of the business, whereas some small business owners might ignore certain aspects of a business with which they are unfamiliar. That will not be the case here. The other benefit of having these skills among the business owners is that the company can pay less in salary, which will be essential during the start-up phase. The reality is that quality employees cost money, whereas business owners can get by with minimal withdrawals from the business because they are receiving equity. At the end of the day, it is important to minimize the costs for salaried staff, especially in technical professions, in order to preserve cash flow during the initial start-up and rapid growth stages.



The third strength is that the start-up has financing in place. This is an essential strength for a couple of reasons. The first is that a lack of capital undermines a lot of start-ups. Often, costs are higher than the owners think, and they try to start their business with minimal capital. This creates a constant cycle of not having enough cash, and the business is vulnerable from day one. Having ample start-up capital is necessary to avoid that. The second reason why this is valuable is because there are downsides to having to utilize external capital. Even if it so happens that external capital is needed, equity capital equates to a loss of control over the company at a certain point because the interests of other shareholders matters more, and debt capital represents a drag on cash flow that reduces the amount of money that can be plowed back into the business.



These strengths basically combine to give 3 Squares a good starting point. The company has some of the foundational elements in place that will smooth the launch and growth phases of this company.

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These strengths by no means guarantee the success of 3 Squares, but the company is more likely to succeed with them in place than if any of these strengths were absent.

Weaknesses



There are some internal weaknesses that bear discussion. The principles, while talented in terms of having strong business education, are relatively inexperienced in terms of actually doing this. There are no veterans of food service, nor are there any veterans of seniors' services. The implication of this is simple -- there will be a very steep learning curve for everybody involved in the business, and success will be dependent on the ability of these individuals to traverse up the learning curve as quickly as possible, and probably to bring on more savvy veterans going forward if they wish to expand their business rapidly.



Another key weakness that 3 Squares faces, as it relates to the inexperience, is a lack of direct contact with the seniors' market. Ideally, the company would want to have contacts either directly with seniors or with institutions or medical providers who can recommend the service to seniors. Not having these in place will mean that in terms of marketing, the company is starting from scratch to build its funnel. In a start-up, building a proper funnel is one of the biggest challenges. Many start-ups are simply sales-focused, but to be driven by sales ideally means having a funnel of qualified leads, so that the reps are not just cold-calling, an activity that historically has a low rate of return.



The third major weakness that 3 Squares faces is common to all start-ups. The company's brand is completely unknown. When you start a company, people simply have never heard of you before, and a lot of the initial marketing activity revolves around creating brand awareness, and establishing a message. It is not easy to start from scratch. It is pretty reasonable to suggest that 3 Squares is going to need some word-of-mouth recommendations from its early clients, but ultimately the market is often geographically scattered. This is why it is recommended to initially target areas with unusually high concentrations of seniors, to build word of mouth that can extend beyond those geographies. Further, such targeting if successful will help to build a book of business and stable cash flow to help facilitate future growth.



All told, the company's weaknesses relate to inexperience, and overcoming these weaknesses really rests on the principals and their ability to learn quickly, on the fly. The weaknesses also pertain to marketing, insomuch as they reflect some shortcomings that will make the initial stages of marketing and brand-building that much more difficult. So 3 Squares has to consider how quickly it can overcome these weaknesses in order to really put the company in the best position to succeed.

Opportunities



The opportunity here has been identified as the growing market for home meal delivery to seniors. Many seniors either cannot cook anymore, or do not wish to. The business is small, but growing. There is general lack of awareness about the concept even among seniors, which while a challenge makes clear that the size of the opportunity really is only going to grow, for any firm in this business.



There are further opportunities as well. There is strong interest in things like organic eating, healthy diets, and the ability to combat food deserts. Many areas of the US lack quality food options, and what this means is that there is opportunity to market this service not just as food (thus competing with any other delivery service) but healthy food….....

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References

MindTools (2017) SWOT analysis. MindTools.com. Retrieved April 30, 2017 from https://www.mindtools.com/pages/article/newTMC_05.htm

Root, G. (2017). What are the main purposes of a business plan? Houston Chronicle. Retrieved April 30, 2017 from http://smallbusiness.chron.com/main-purposes-business-plan-2599.html

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