In this article, we will discuss the development of a SWOT analysis, its development, and how it can be used to acquire financing from a bank or investor. Payday Lenders generally are able to remain profitable and cash flow positive in any economic climate due to the fact that they are able to render a lending and loan service that is in constant demand among the general public. One of the best aspects of this business is that they are able to generate highly gross margins from their lending services. A well written SWOT analysis will feature a strengths section, a weaknesses section, and opportunities discussion, and a threats discussion.
Most importantly and first, you are going to want to focus heavily on the strengths that are associated with your Payday Lender. Foremost, you should again reiterate the high gross margins generated from your Payday Lender capital lending services while also showcasing the generally low costs associated with operating this type of business. Another important mention should be the relatively low cost overhead associated with operating this type of business as they are typically located in high trafficked areas among low income people.
Also within the strengths section of the SWOT analysis, you should focus on your abilities to operate this business on a day to day basis, your experience as an entrepreneur, and how you intend to bring the operations of your Payday Lender to profitability very quickly through its lending operations.
The next section of the SWOT analysis focuses significantly on the weaknesses that are associated with this type of business. Foremost, you should heavily discuss the fact that there are many other types of businesses that operate in a similar capacity to your Payday Lender. You may also want to discuss the relatively high start up costs that are associated with an Payday Lender. Also, you are going to want to discuss the default rates that are associated with operating this business on a regular basis. Here, you should also focus on how you intend to mitigate losses as it pertains to payday lending.
Next, you are going to want to focus significantly on the opportunities that your business will have to expand during its first five years of operation. This may include developing new locations, hiring additional personnel, and engaging in a broad based marketing campaign that will ensure that your Payday Lender business is able to rapidly expand and repay its debts on a timely basis. You may also want to discuss how you intend to obtain additional capital in order to expand your lending operations.
Finally, you are going to want to effectively showcase to your SBA loan banker or investor the threats that will be faced by your Payday Lender. We strongly recommend that you emphasize a number of these issues as it will be to the benefit of your investor or banker to see how you intend to mitigate these risks as time progresses.
As always, we strong recommend that you work closely with a number of professionals including CPAs, attorneys, SBA loan consultants, conventional loan consultants, and other professionals that will ensure that you have produced a SWOT analysis and business plan that is appropriate for both a bank and a potential investor. It is imperative that you have a clear understanding of the complex nature of raising capital for your venture and by having a number of professionals in place – you will be in an outstanding position to receive the capital you need in order to start your Payday Lender.