I was recently approached by another blogger and internet marketer about launching a joint venture. The idea behind it was great and I could tell by his enthusiasm and my initial enthusiasm that we were on to something that could turn out to be very special.
There were few, if any barriers to entry. All we needed to do was buy a domain, start a blog, and market it. But the more I looked into the opportunity, the more I realized that while this idea had merit and could potentially do very well, everything didn’t add up.
Analyzing a business opportunity with a SWOT Analysis
A SWOT anaylsis is a way to perform a strategic business analysis. It stands for Strengths, Weakness, Opportunities, and Threats. To do a SWOT analysis, you make a quadrant on a sheet of paper and brainstorm all the possibilities for each of the four categories.
For this opportunity I came up with this SWOT Analysis (My SWOT was actually longer, I only used top level results as examples):
- Strengths: Excellent idea in an under served market; there is a need for this type of website.
- Weaknesses: No business plan in place; we have knowledge, but are not experts in niche.
- Opportunities: Possibility to establish an authority site in the niche.
- Threats: We aren’t experts in the niche, so it may be easy for an expert to surpass us.
A SWOT Analysis can be applied to many situations, including your business, career, educational opportunities, and even your personal finances. Personal finance example of SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats.
Other factors to consider along with SWOT Analysis
Is there a market for the business? This was one of the biggest strengths to the idea. We both strongly believed there is a market for this type of site. Neither one of us have found a good example of what we had in mind. The opportunity is rich for someone to create an authority site in this niche.
Have a strong business plan in place. As I mentioned, the idea behind the site was excellent. But as we discussed the details of how it would be run and what each person would be responsible for, I came to the realization that a good idea does not equal a good business plan.
We had a good understanding of who would use the website and how it would be used, and we knew how we could make money from the website, but we did not have a clear understanding of each person’s responsibilities. Before long, it became evident to me that while the other party brought the initial idea to the table, I was going to have to do the bulk of the legwork.
Know your strengths and weaknesses. I have a good understanding of what my strengths and weaknesses are related to the internet and blogging, and after talking to the other person and examining his work (which is very good by the way), I realized that too many of our strengths and weaknesses were aligned. Most business partnerships work out better when each partner brings a separate set of skills to the table. But our skills were very similar and we were deficient in several places – potentially creating a weakness to the business.
Don’t spread yourself too thin. This was the biggest hindrance for me. I currently run this website and several others, and I have a full time day job. I love running my websites, but with my current obligations and a baby on the way, I simply don’t have time to take on another project – even though this one has merit.
Recognizing when to pass on an opportunity
This was one of those times that I felt it was best to take a rain check on this opportunity. I believe we could pull it off if we both had the time in our schedules, some solid preparation time, and a strong business plan. But right now those things didn’t line up just right. This is a great idea and opportunity, it’s just not the right time.