As an entrepreneur, you must consider all aspects of your business no matter what kind of business you are involved with. If you are involved with money lending then you must look at the front as well as the flip side of the coin because the risks are more when you deal with liquid cash. You must look at the profits as well as the losses, the pros as well as the cons, the internal as well as the external business environments. All these careful considerations will ensure a better service, a profitable business and desired results along with complete peace in mind.
SWOT And TOWS Matrix
TOWS matrix is a simple variant of the classic and most common business tool, SWOT analysis. These are actually the different arrangements of the acronyms of the words Strengths, Weaknesses, Opportunities and Threats.At a real level, the only difference between SWOT and TOWS analysis is that the former emphasizes on the internal environment whilst the latter emphasizes on the external environment.
Ideally the external environment involves the threats and opportunities and the internal environment includes the weaknesses and strengths. Both these tools will help you in formulating effective strategies for your whole organization, a team or a department. It will also help in thinking about a process, formulate a marketing campaign and even assess your own skills and experience.
Extending The Use
You can extend your use of SWOT and TOWS techniques to deal in detail and consider all available strategic options to you.
Identifying strategic options is easy with SWOT or TOWS analysis. You get a better and clear picture about the market and understand the strategic choices in a better way. These strategies which are in reality an art to determine ways to face challenges and win it will help you to ask and answer several questions. These questions include:
- How do you make the most out of your business strengths
- How to circumvent your weaknesses
- How to capitalize on the available opportunities and
- How to manage the threats.
Use Of Different Tools
The most significant tool you can use is the strategy tool. This will help you to map out the best possible direction considering your skills and techniques to understand the competitive environment of the lending industry.
- This will also help you to identify the options and set your strategic priorities accordingly.
- You will be able to deliver your strategy in a better manner and work intelligently in specific areas of marketing and operations.
Creativity tool is another important tool that will help you in developing solutions in the most creative way.
- It will help you to discover the wide range of approaches and use the best ideas.
- You will learn how to use some of the great industrial strength processes to be more innovative in your approach like and others.
Make A Better Match
The next step of your analysis is to match the external opportunities and threats with the internal strengths and weaknesses.
- The strategic approach and the TOWS tool will match the Strength and opportunities in a “Maxi-Maxi” strategy to use the strengths so that you can maximize the available opportunities.
- The ST strategy involves “Maxi-Mini” strategy where your strengths are used to its fullest to minimize the threats.
- The WO”Mini-Maxi” strategy will minimize the weaknesses of your business by utilizing the business opportunities.
- Lastly, the WT”Mini-Mini” strategy will minimize weaknesses to avoid threats.
All these strategies will ensure better and safe recovery of money from the borrowers.
Significance In Community Based FIs
Now, as an entrepreneur you may wonder what is the relation of these analyses with community-based FIs and money lending business. Well, money lending is all about taking risks and availing the opportunities. Therefore, you must have all aspects covered so that you can do as good a business as others. Simply designing a website for your money lending business that looks like is not enough. Knowing about the four aspects and its effects will help you a lot to advance towards your set goals.
Your strengths will enable you to provide main street financial services with a personal touch to ensure better customer service.
- It will also help in local decision making and developing economies of scale for loan application, delivery and closing.
- Lastly, it will help you to understand the local market conditions.
Knowing your weaknesses will provide a better lender experience outside of real estate making the best use of the shortfalls of commercial lenders.
- It will reduce the time taken to render any credit decision with such scoring models.
- Due the use and advancement of technology these scoring models ensure availability of capital with improved efficiencies without sacrificing customer service.
- It has also increased the capacity of the lending companies to market online and reach to more audience to create a similar impact as the larger organizations.
The knowledge of opportunities and taking the take advantage of financial technology to invest has increased the efficiencies behind the scenes.
- There will be a much greater efficiency in managing the loan applications, incoming financial data, deal workflow and lender pipelines.
- Local credit approval targeting the SMEs with better creation of social media presence is facilitated when you know that a community bank or a credit union is hard to find.
- In short, when you know the opportunities you actually become an educational lending institution.
Lastly but most importantly, knowing threats and overcoming it will ensure better market presence.
- With the assurance of regulatory scrutiny online lenders will continue to exist and thrive.
- It will also ensure that there is more compliance with newer accounting standards that will consume resources.
Therefore, to analyze things in a better way, you must look beyond the obvious and deeper into the matters. The two best tools to do it are the SWOT and TOWS matrix. Using these tools you will be able to develop strategic options that will help you in intensive and intrinsic analysis of the external and internal business environments of the lending industry.
Amy Walsh is an experienced and skilled business consultant and Financial advisor. She helps clients both personal and professional in long-term wealth building plans. During her spare time she loves to write on Business, Finance, Marketing, Social Media. she loves to share his knowledge and Experts tips with her readers.