October 17, 2023
Most people know what a SWOT analysis is — it’s a listing of a business’s strengths, weaknesses, opportunities and threats. Yet, few farmers implement such a document for the benefit of their operation.
Why is that?
Perhaps some farmers are confident they already understand their business adequately enough that they don’t feel the need to map out a SWOT on paper. Others are plagued with “decision fatigue” when staring down that blank piece of paper, while some still may be resistant to the changes such a document might demand.
“The real difficulty is taking the advice that a SWOT uncovers,” admits Kansas farmer Lon Frahm. “You have to realize what you’re good at — and if you’re not, you better hire it.”
Frahm joined a farmer peer group in 2011 that has taken turns over the years visiting each member and, among other things, conducting SWOT analyses for each operation. While he says he has been happy with his own farm’s “scorecard,” he is always on the lookout for new ideas at these meetings.
“As the saying goes, ‘If you can spot it, you got it,’ ” Frahm says. “Every time we get together, we look for ways to improve.”
The first step to creating a useful, usable SWOT document is simply assembling all of your team into a single location, according to Tim Schaefer, founder of Encore Consultants. And involve a third-party facilitator if at all possible, he adds.
“A good facilitator will help manage the process, prod assumptions and pull introverts out,” Schaefer says.
The kitchen table is a great place for a lot of candid talks, but it’s not the best place for building a SWOT analysis, Frahm says.
“Get away from the farm and hold it at a neutral site if possible,” he says.
Frahm is in full agreement with the recommendation to involve third parties if at all possible during the process.
“Even if you do it yourself, you really have to have someone else look at it eventually, whether that’s your banker or accountant,” he says. “Who will hold you accountable?”
To this point, Christian Wilson, executive of operations at Frahm Farmland, says there are three factors that largely determine the success of a SWOT:
what peers are on hand to do the analysis
who delivers the final advice and how they deliver it
how open-minded the recipient is to the advice
“The real difficulty is taking the advice!” he says.
There’s also a psychological benefit to taking the work off-site, Schaefer adds. “There are positive changes that happen when you leave your comfort zone,” he says. “Your mind opens up and accepts changes easier.”
Another challenge is to avoid “groupthink,” Schaefer says. Oftentimes, the junior generation is hesitant to speak up, and the senior generation tends to assume that everyone thinks the same way that they do.
A common way to overcome this obstacle is to start the process by having everyone write down their own perceived strengths, weaknesses, opportunities and threats on Post-it notes. Beginning with a nonverbal task will minimize groupthink and ensure that every participant feels like they are active contributors.
After that, transfer the notes to a more readable format, Schaefer says.
“We like to use really big flip charts or mind-mapping software that can be projected onto a big screen,” he says.
Next, Schaefer likes to go through a round of what he calls “keep-kill-combine.” Cluster similar ideas together and get rid of the ones that aren’t truly helpful. That leaves you with a good blueprint to move forward.
“You want your SWOT to be fairly tight, and this process helps with that,” Schaefer says.
It’s also important to note that strengths and weaknesses are largely internal factors that can be controlled to some degree. In contrast, opportunities and threats are external forces that often require much more adaptation and reactive behaviors.
Everyone loves to talk about strengths because they’re the building blocks of any successful business, according to Winifred McGee, business consultant and former Penn State Extension educator.
“On the other hand, there are weaknesses — things that are a little harder to hear but still important,” she says.
Opportunities can also be exciting to discuss, but there can be real value in identifying potential threats, McGee adds.
“Threats are the flip side of opportunities in that they are external and have a potential to impact your farm equally,” she says. “By identifying the threats to your success early in the game, you may have fewer surprises.”
One real-life application of this would be taking a closer look at your insurance coverage, McGee says. For example, fire insurance is covered on your farm owner’s policy. However, there are several methods of coverage from which you can choose.
Some opt for actual cash value, which covers the original amount of money an item is worth, minus wear and tear. Others opt for replacement value, which gives you enough money to outright replace an item.
And then there’s functional replacement value, which allows you to require something that will perform the same function as what you lost, even if it’s not identical to what you’re replacing.
That’s just one specific example, but don’t be afraid to get into the weeds a little in order to tailor a SWOT that’s highly specific to your individual operation.
Landon Brown, who farms with his brother and father in northwestern Kentucky, is another grower who has found value in conducting semiregular SWOT analyses on his operation. Brown has done this with some assistance from Farm Credit, which offers a valuable benchmarking service that lets him compare certain metrics against comparable operations.
“I wanted to know where I’m at, because we’re always trying to improve, and I wanted to see how we stack up to similar farms,” he says.
Completing the SWOT helped Brown understand the give-and-take that was happening due to the various business decisions he was making. Some of those decisions can simultaneously be strengths and weaknesses.
For example, Brown prefers to upgrade farm equipment most years, which means his machinery costs are relatively high. However, the give-and-take aspect of this decision allows him to minimize maintenance costs and keep labor costs relatively low.
Also, Brown is in a position where he has a good amount of working capital. That allows him to acquire more farmland. There’s just one problem — prices are aggressively high right now.
“There’s land to be bought, but you don’t want to be buying land just to be buying it even though we’re sitting on some cash,” he says. “So our cash isn’t really working for us right now.”
Ultimately, Brown uses the SWOT as a means to guide how he chooses to run his operation.
“It 100% helps you be more deliberate in your decision-making process,” he says.
Brown says a good first step in creating a SWOT is simply thinking about your goals. What is it that you want, and what obstacles might be in the way? He also says your farm’s balance sheet will guide the process to a big degree.
Brown says he is mindful of his operational strengths and weaknesses throughout the calendar year, but like clockwork, he sits down and revisits the SWOT each January and makes alterations where needed.
Every farm out there is different, Brown adds — and that’s OK.
“There’s not a right way or a wrong way, but there’s always a better way,” he says.
Again, the prospect of staring down a blank page can be a little intimidating. To get answers, you have to start by asking some questions. Here are some “reflective questions” that will help you start mining valuable operational insights:
What unique skills, resources and assets do we possess that set us apart from others?
What do we tend to do better than our competitors?
How can we leverage our strengths to best position the operation for success?
Do we have limited resources, skills or technology that are restricting our progress?
Are there recurring issues or bottlenecks that negatively affect our efficiency?
Are there areas of the operation that we commonly struggle with?
What emerging trends or market shifts should we be paying more attention to?
Are there partnerships or collaborations that would benefit us?
Are there diversification plays or new avenues of revenue that we should consider?
What external competitors or regulatory changes could negatively impact us?
Are there emerging geopolitical or environmental factors that we need to consider?
How can we prepare for or attempt to minimize these potential threats?
“The real value of a SWOT is that it’s a structure for reflection,” says Davon Cook, principal at Pinion (formerly K-Coe Isom). “It’s easy to understand, and it helps you step back and think about your business.”
Don’t worry if you struggle with where to file individual points, Cook adds. Sometimes strengths feel like opportunities. Sometimes weaknesses feel like threats. And sometimes, even weaknesses could be perceived as potential opportunities.
“They can get mashed up, and that’s OK,” Cook says.
Wilson adds that entwining the four components of SWOT can be beneficial, depending on your approach. “Your biggest threats and biggest weaknesses always have the most opportunity attached to them,” he says.
Face the future
Frahm, Schaefer and Cook are all of the mindset that a SWOT analysis is really just the first step in a more long-term strategic planning process.
“SWOT isn’t as much of a final product as it is an educational tool,” Cook says. “Everyone has different levels of knowledge, and this helps you uncover who knows what — and who doesn’t. And debate isn’t bad, either. The conversation is valuable in and of itself.”
Here’s a 10-point plan of attack once you’ve inked your own SWOT analysis:
Review and analyze the SWOT.
Prioritize and rank each item.
Set clear objectives and goals.
Develop strategies that address those goals.
Allocate resources according to your priorities.
Create an action plan that includes specific steps, timelines and milestones for each goal.
Communicate your plan with employees and other relevant stakeholders.
Monitor progress, making adjustments when needed.
Learn from setbacks, if and when they occur.
Celebrate achievements, and keep your team motivated.
How often is the SWOT analysis worth revisiting?
“You don’t have to redo it from scratch every year,” Schaefer says. “Three years might be a sweet spot — it’s long enough, but not too long.”
Frahm only occasionally revisits his own operation’s SWOT analysis but supplements it with regularly scheduled employee evaluations. He also emphasizes the power of flexibility throughout the strategic planning process.
“I love having a Plan B because you can change it every day if you need to,” he says.
Frahm also stresses the importance of humility throughout the process.
“What you don’t want to admit can be a problem,” he says. “People seldom realize what they need to work on without some help. It’s easy to get into the mindset of, ‘This is the way we’ve always done it.’ If someone else tells you that’s not the best way, it can be humbling.”
10 red flags
Don’t let easily avoidable mistakes get in the way of a well-crafted SWOT analysis. Here are the top 10 red flags you’ll want to avoid:
Lack of objectivity. Seek out diverse perspectives and encourage open and honest feedback.
Ignored external factors. It’s easier to focus on internal factors, but developing realistic threats and opportunities will give you a more comprehensive view.
Superficial analysis. Get into as much detail as possible to gain the most useful insights.
Disregard of data and evidence. Don’t rely on assumptions, but base your analysis on concrete data where possible.
Overemphasis on quantitative data. Qualitative insights are also useful, and some strengths and weakness might
not be quantifiable.
Confirmation bias. Don’t look only at evidence that supports your preconceived notions.
Absence of stakeholder input. Engage employees, suppliers and other relevant entities
to ensure you’re gathering diverse perspectives.
No action plan. Be sure to map out the next steps once the SWOT is completed.
Failure to prioritize. Resources tend to be limited, so know where your focus will be most effective.
Infrequent updates. A one-time analysis will get less useful over time, as both internal and external conditions are
Farmers conducting a SWOT analysis might benefit from a little outside reading that can serve as valuable supplements to the process, according to Tim Schaefer, founder of Encore Consultants. In particular, Schaefer finds value in a book by Patrick Lencioni titled “The Five Dysfunctions of a Team.”
In this book, Lencioni weaves together a fictional story to illustrate the titular five dysfunctions and shows how to effectively address each one. Here’s a quick look at each of them:
Absence of trust. Without trust, it’s much harder to achieve open communication, healthy conflict and collaboration. In contrast, when team members are vulnerable and honest with each other, they can build up trust over time.
Fear of conflict. Don’t let constructive conflict get in the way of progress. It can help teams make better decisions and encourage leaders to structure an environment for fostering healthy disagreements that can be resolved effectively.
Lack of commitment. Having clear decision-making processes that encourage buy-in from everyone involved will foster strong commitment from all of your team members.
Avoidance of accountability. Establish a culture of responsibility and hold your team members (and yourself) accountable for their actions and performance.
Inattention to results. Don’t let personal interests override the collective success of the team. Align individual goals with your team’s objectives and focus on overall organizational results.
About the Author(s)
You May Also Like
Current Conditions for
Enter a zip code to see the weather conditions for a different location.
USDA exports – Unknown buys soybeans, November 28, 2023Jan 19, 2023
Weather hinders record South American exportsNov 28, 2023
Create a winning 2024 grain marketing planNov 28, 2023
Corn, soybeans bounce following Monday’s lossesJan 19, 2023