about some crucial issues.
Why would someone really want to invest in you?
Just what are your strengths and weaknesses?
Are your strengths common or competitive?
Can your weaknesses be overcome?
While talking about Mikhail’s business, and after several latte refuelings, some headway was achieved. Mikhail did indeed make an excellent taco. He infused them with all sorts of unique combinations, from mangoes to margarita-marinated mahi mahi. His strengths were both common – he was good at making tacos – and competitive – he made them better than anyone else around. Jill suggested he focus on these issues as his strengths. Mikhail didn’t have to be brazen to make such claims, she said. A section beginning with: “Management believes that its strengths are found in its ability to prepare unique and flavorful tacos” would work.
The weakness section she said was the trickier one. Just as strengths came in two varieties, common and competitive, so did weaknesses. They were either common or catastrophic.
After reviewing his plans some more Jill didn’t see anything that would stand out as an obvious catastrophic weakness. Was there a risk that the entire country would turn away from Mexican food? Not likely. Was there a risk of mad taco disease? Again, not likely.
But Jill did see a common weakness and, she said with a smile, it was in this section where you turned a negative into a positive.
Mikhail made a great taco. The weakness, which was common to many new businesses, was that no one knew this. The company was weak for brand awareness. This, of course, could be overcome.
The other obvious weakness was that Mikhail was a recent Russian immigrant. Who would ever expect a former Moscow bicycle mechanic to be creative genius when it came to Mexican cuisine?
Jill saw this possible weakness as a huge potential strength. The human interest angle alone – Russian immigrant/Mexican cuisine/only in America – would help turn a lack of brand awareness into a branding strength.
Mikhail was on his fourth latte and saw her vision clearly. He wanted to get back home and start writing. Jill laughed and said she understood. She also asked to see the business plan when it was finished. She knew some people who may be interested.
Before we further discuss the Strengths and Weaknesses section, it is important to underscore a key element of the story. Business plans aren’t always (or best) written in a vacuum. When you are blocked or struggling with a section, clear your head and seek out the perspective, insight or just different view of someone you trust. It is amazing what human interaction can do for breaking through a tough section. And, with the benefit of additional input and review, you will find yourself drafting a better plan.
Part of gaining an intimate knowledge of your business is understanding your strengths and weaknesses (also called Core Competencies and Potential Liabilities or Competitive Advantages and Competitive Challenges and often given its own section). Think back to everything you’ve ever learned about competition and marketing (or skip ahead and read Chapter 8 on Marketing). At their most basic, competition and marketing are about exploiting the weaknesses of other businesses and/or playing to the strengths of your own business. Analyze your business and think like a competitor. What strengths would a competitor try to downplay or neutralize? What weaknesses would a competitor want to highlight?
Once you have identified strengths and weaknesses you can begin to plan accordingly. Are there strengths that are currently underutilized? What might you do to take advantage of your unique attributes? Are there weak points that you can shore up – through training, strategic hiring, team building, organization or planning? What can you do now to limit the marketing options of your competitors later? Focusing on strengths and weaknesses will lead to better decisions as you proceed.
Strengths
As discussed in the story, there are two basic categories of strengths a business can exhibit: Common and competitive. A common strength is something you do well. A competitive strength is something you do better than others in your field.
How a company exhibits strength – through corporate vision, product, operations, marketing or sales – may change from business to business, but will inevitably fall into one of the two categories. Knowing if your strengths are common or competitive can be difficult to determine. But it can be extremely useful when understood. A business can improve through common strengths. A business can dominate through competitive strengths.
What are your strengths? It shouldn’t be a tough one to answer if you have a compelling business strategy. Challenge your idea’s reason for being if it doesn’t have clear strengths.
Consider that business strengths are noticed by two groups: Competitors and customers. What they see will help you understand what you’ve got. Customers (hopefully) will notice product strengths (lower price, higher quality, better variety) in individual products or through positive brand associations. A strong brand can encompass a number of individual products and enhance the perceived positives of all. For example, the Coca-Cola brand extends to and benefits Sprite, Diet Coke and even Mr. Pibb.
Operational strengths such as logistics may not be overtly noticed by customers, but they will feel the effects of such strengths. Higher efficiency will mean lower prices, faster service and fewer mistakes. Even if customers don’t know why your product or service is better, they will certainly notice the end result. So will competitors and soon your strength may become a common business practice for an entire industry. But the point is that if both customers and competitors are noticing these things, whether directly or indirectly, you should notice them too and practically speaking they should be deliberate strategies in your business plan.
Sales and distribution strengths will likely not be noticed by customers. They won’t care how many stores carry your product or how good your contracts are. All they know is whether or not they want to buy your product or service at any particular point in time. But they can’t buy if they are not exposed to your product or service. Distribution controls that exposure. Sales come from an ability to turn exposure into commitment. As such, sales and distribution strengths are key, and an area your competitors will be sizing you up on. If they are noticing your strength, so should you.
Unique leadership skills or corporate vision can create highly advantageous employee and vendor loyalty. It can also increase sales through good distribution relationships. There can be huge benefits from such skill and vision. That said, none of it may be noticed outside the corporate structure. Until, that is, your competitors wonder why you are kicking butt while they are sitting still. Then corporate vision and leadership will be noticed by everyone with whom you do business – from the mailman to the sales force to the customer. Do you notice it internally now? Have you developed it into a core competency that can be considered one of your strengths? It should all flow from your mission statement as a reflection of an organization’s leader. Think back to Rich Dad’s B-I Triangle, which outlines the mission, leadership and teamwork as the three pillars of a successful business.
There are many more examples to consider. Maybe you are charismatic or have a gift for motivating others. Maybe your honesty engenders loyalty in those with whom you partner. Maybe you were an accountant in a past life and have a true talent for budgeting on a shoestring. Your personal strengths may translate quite well to your business. Don’t overlook your key strengths. In business, you need every one you can get.
Think widely about your strengths. Think about what you do well. Think about the strengths of your partners or team members. Think about what works well in your current business, if you have one. If you aren’t currently in business, you will need to think creatively to highlight strengths that will realistically apply to your business. Be real and don’t fool yourself. Talk to people you trust about what they think your strengths are. Do any of these strengths really help your business? Do they lead to lowering costs or increasing sales? These are the types of strengths to include in your business plan.
Know your competition. Read their business plans if you can. And keep in mind they may be reading yours. A business