Rolling for Initiative is a weekly column by Scott Thorne, PhD, owner of Castle Perilous Games & Books in Carbondale, Illinois and instructor in marketing at Southeast Missouri State University.  This week, Thorne talks about a simple tool for analyzing your business.
 
With the coming of a new year, I find this a good time to evaluate/re-evaluate the current status of the store and look at where we want to be going in the next year or so.  The best tool I have found for doing this is a SWOT analysis.
 
When most stores open, and especially if a store plans to approach a bank or other financial institution for financial backing (not that you will likely get it as it is a byword in the industry that approaching a bank for a loan to open a game or comic store is tantamount to automatic failure), one of the things the bank will ask for (before turning you down) is your strategic plan for the business.  The first step in most business strategic plans is a situation analysis and the most common form of situation analysis is a SWOT analysis, a simple but highly effective framework for analyzing a business' current status and pointing out potential areas of improvement.
           
SWOT stands for Strengths, Weaknesses, Opportunities and Threats and is a technique credited to Albert Humphrey, a management consultant who developed the technique during the 1960s.  A SWOT Analysis combines the four into a 2x2 grid with Strengths and Weaknesses viewed as "internal" aspects of the company while Opportunities and Threats viewed as "external" ones.  In another combination of the four variables, Strengths and Opportunities are viewed as "helpful" to achieving the company's objectives, while Weaknesses and Threats are classified as "harmful" or detrimental in achieving them.
 
When looking at the internal factors, you should consider as many as possible and honestly evaluate them.  For example, consider the store’s location.  If it is in a less desirable part of the community (or hosted on a glitch-ridden web hosting service), you may save quite a bit in rent or hosting fees, which is certainly a strength for the company, as rent is typically the store’s largest non-variable expense.  However a poor location may preclude customers from easily finding you.  What starts as a strength may eventually turn to a weakness.  For a number of years, Castle Perilous located on the 2nd floor of a building with no elevator or escalator.  We did well there with comparatively low rent during years when funds were limited and viewed the low rent location as a strength.  However, as sales increased to the point that we could afford higher rents, we started viewing that cheap location as a weakness and began looking for a more desirable location to which to move.
 
Opportunities and Threats change the same way over time. That's why it is a good idea to revisit your strategic plan and especially your SWOT analysis every few years.  If you want to perform an even more thorough analysis, ask your employees to conduct one.  Though you may not choose to make them privy to all information available about the business, especially financial, they should have a good idea what they see as the business’ strengths and weaknesses, as well as potential opportunities and threats.  Since they are coming at the analysis from a different viewpoint, they often see weaknesses and threats to the business that the owner or manager may have overlooked.  If you really want a thorough analysis, ask your customers for one.  Much like your employees, they will not have access to all the information you will but will bring yet another viewpoint.   Finally, once you have all three analyses, compare them.  See if the others see the same opportunities and threats that you do.  If something you see as strength appears on the other two, it is a strong indication that is a competitive advantage for your business.  However, if the same weakness shows up on all three or even two of the three, that's a good indication it is something at which you need to take a look.
 
The opinions expressed in this column are solely those of the writer, and do not necessarily reflect the views of the editorial staff of ICv2.com.