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No Threats . . . Really?


Recent client engagements have encouraged me to share with you a fresh perspective on the importance of understanding External Threats to your business and how to use what you learn.

As part of my annual planning cycle, I walk my clients through a SWOT analysis—SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats.


This analysis is a commonly used tool in business strategy development to help business owners take stock of where their business is and how it can improve. You use this analysis to distinguish and recognize your business’ unique Strengths, get clear on and mitigate your Weaknesses and Threats and identify potential Opportunities on the horizon.

In today’s post I want to focus on Threats. (I will discuss observations and tips on the Strengths, Weaknesses and Opportunities perspectives in future posts.)

In a SWOT analysis, Threats are EXTERNAL forces—ones that are outside your control that can negatively impact your business.

To help my clients identify the Threats they could potentially face, I begin by asking them four simple questions:

  • What trends and threats could harm your business?

  • What is your competition doing?

  • What threats do your weaknesses expose you to?

  • What obstacles do you have coming up?

At first, some of my clients struggle to come up with things they actually consider external threats—in a many cases it is tough to get them to take this perspective seriously.

On a couple of occasions, I’ve gotten worksheets back that actually said, None!


But after some discussion, even those that wrote “None! ” start to realize that there are some real external Threats their businesses could encounter—situations where they have no control—and their lists begin to grow.

Here are some common Threats:

  • State and city mandated labor rates

  • Higher taxes and more regulations on businesses

  • Earthquakes!

  • Shortage of skilled technicians that want to work

  • Data breeches

But no one ever wrote, “Global pandemic shutting us down for months!”


Now that we have all experienced a world-wide crisis, the Threats perspective in this analysis takes on a whole new level of importance—sometimes the unthinkable actually happens.

This year business owners have experienced:

  • Governments passing ordinances shutting down whole business sectors

  • Licensing bodies holding businesses hostage to follow their new rules

  • Customers unable or afraid to visit a business

  • Supply chain issues because factories have closed

These actual experiences and others like them are real, existential threats to many businesses. Obviously, no person and no tool can predict every global or economic catastrophe, but, it's clear to many business owners now that anticipating threats has taken on a whole new level of importance.

And while performing a SWOT analysis is helpful . . . it only becomes valuable when you do something with the results. For each threat you identify, you need to determine what safeguards, (if any), you can put in place to minimize the impact that specific threat can have on your business.

For example, for the last seven years I have encouraged all my clients to have a minimum of three to six months' operating expenses in a cash reserve.

Many would say, “Thomas, that would be nice but when are we ever going to need that? Why keep all that cash just parked in the bank?"

Well, they are not saying that anymore.

You might not be able to predict all the threats your business may face, but 2020 sure has presented all of us with challenges we never thought possible. I would like to encourage you to use what you have learned this year to be better prepared for the external Threats that could become future realities for you.


Do you know someone that could benefit from this tip? Please share this post with them.


Be encouraged. Be strong. Be courageous.

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