SWOT (abbreviation for Strength, Weakness, Opportunity and Threat) analysis remains the most effective planning tool for businesses. It helps assess a business on the whole, the resources at its disposal and its specific environment.
SWOT analysis plays a key role in the marketing plan, business strategizing and also as the base for all team deliberations. When done properly, it can provide you all the information you need for developing your business and is very handy in different types of circumstances that you face in your business.
By conducting the analysis, you can understand the business and the markets it will flourish in. The analysis also helps potential investors to know about the options that promote and those that affect a business at a specific time.
At its core, SWOT analysis aims at identifying what you are good at and on the ways by which you can further improve. It shows whether you are capitalizing on the opportunities present and helps identify changes in marketing trends, so you are equipped properly to deal with them.
Segregating The Factors Into Columns
To start with you need to create a four columned grid forthe strengths, weakness, opportunity and threats and write down the related factors in each of the column. This will help in analyzing the various factors you have entered and comparing and combining them wherever needed. If a few of the factors appear in more than one column, do not worry much about it.
A factor that is a threat can also turn to be a great opportunity you should consider. Increase in competition in your specific location can be a big threat to your existence, but the same competitors could bring in more customers. They could very well visit your business, if you are have a good customer service and attractive package for your service or product.
Here are 5 quick steps to help you get the all-important SWOT analysis done:
Identify Your Strengths/Know What You Are Good At
Knowing your strengths will give you a decisive advantage. The strengths need not be your personal expertise alone. It concerns a wide variety of factors including
- Customer loyalty
- Processes and more
Consider factors like the things that your business excels in and the unique expertise you possess. Your experience, knowledge and competitive spirit should be assessed. Find out which part of your business brings in the most profits. The answers to the above factors will help you find the attributes that you can benefit largely from and help you reach your business goals more effectively.
Assess the things that your business excels in. This can include marketing prowess, exemplary customer service or the eco-friendly packaging you provide. The best way to assess your strong points is by comparing them with that of your business competitors.
For instance, if your competitor provides the quick turnaround time just like you, it cannot be included as your strength. However if your staff are more client friendly than your competitor, it can be included in your list of strengths.
Be realistic and truthful while listing the strengths of your team and processes so you do not get up false hopes. This can make the entire exercise futile.
Identify Your Weaknesses
You need look impartially at each and every facet of the business operation. Use your best critical eye to assess the services and products you offer and the ways in which they can be enhanced.
Have a look at the customer service you offer and its reliability.
Is your supplier prompt on the delivery just as you had stipulated?
Find out the field expertise that your business sorely lacks in.
When you have listed the aspects that your business is weak in you can take the steps necessary to improve them. For instance, if you find the delivery division is registering delays, you can add on more staff in that department or consider increasing the funding to include automation or other technological inclusions to make the delivery more timely and accurate.
And give special attention to the location of your business. It is vital that the location suit your business objectives. If you run a retail business and expect a steady flow of customers ensure the store is located in or near a busy area with sufficient parking space.
Just as in listing the strengths, you have to be truthful in listing the areas you are weak in. Instead of adding the mistakes which you have made like a situation where a prompt response was not done to a customer request, try to envision the bigger picture.
Find out how you can improve the customer support service so all customer requests are responded to promptly. Try to improve the systems and make sure you update the work processes to enhance the service. This is a more proactive approach rather than blaming the staff or lack of capital for the mistake.
As far as weaknesses are concerned, it is best to receive an outside perspective, as what you consider as your weakest or strongest point, may not be as close to reality as you assume. For instance, you may consider your experience in marketing to be your big advantage, but your customers may look upon your marketing as too conventional and lacking innovativeness. Instead of rejecting the feedback because of its harsh nature, welcome it as it may be the vital key you were missing.
Grab Opportunities With Both Hands
Be open to the opportunities that present in the business. When you complete the SWOT analysis you can
- Easily isolate the core business activities
- Segregate the aspects that you excel at and the reason for it.
- You will also be able to know which direction your best opportunities are present.
- And most importantly you will know in which aspects you will have to make necessary changes to make your business successful.
Once you identify the opportunities you need to assess them. Opportunities can be classified as external and internal.
External opportunities include
- Underperformingcompetitors which allow you the leeway to perform better and outsmart them.
- Technological advances also belong to the external opportunities you can capitalize on to improve your business.
- Changes in legislature which affect your clients can also be turned to your advantage when you provide the support and solution your customers need to face the change.
- Other opportunities you can make use of to the fullest include changes in buying habits of customers and market trends which you can grab and take action quickly before your competitors.
You can also use your weaknesses as opportunities. By finding out a solution for them you can turn them around and make them an opportunity to enhance and make your business more productive. For instance, a problem in the supply department can be resolved by replacing the errant supplier with a reliable one and also one with much lower expense than the previous supplier.
If you are short staffed, use it as an opportunity to hire new staff with better credentials or evaluate the duties that your present staff is doing and make the necessary changes by delegating the tasks so the staff is not overburdened with too much responsibility.
Be Equipped To Deal With Threats
Evaluate the risks that your business faces. This should be done with sufficient amount of guesswork as some of the risks may be tangible like new competition for your business nearby. Or it may be an intuitive guess about the negative impact of a change in regulation, which may not affect you at all.
But irrespective of whether the threat is a real or perceived one, it is safe to be cautious and be geared up for any potential threat that can turn into a big nightmare. This way you will be able to react faster and provide necessary solutions as you have already anticipated the turn of events and planned ahead.
For instance, if a supermarket chain opens shop in your vicinity, you stand to lose the customers that frequent your local grocery shop. Or the market may be flooded with product similar to yours and at a much lower price. These changes can create a negative impact on your profits and gradually cripple your business.
Exploit The Analysis As Much As You Can
When you have identified your strengths, weaknesses, opportunities and threats you have to analyze the information you have collected so far. Here is what you should do:
- Build on the strengths and use them to the maximum potential possible
- Reduce the weaknesses by eliminating them or diminishing the risks they pose
- By clearly identifying the opportunities you have, you can exploit them to the maximum possible limit
- And by knowing the threats to your business you can take the necessary steps to address them and if possible turn them into opportunities.
The key takeaway here is being proactive and having appropriate plans in place to counteract the risks that crop up wherever and whenever they do.
For planning in advance, you can combine the strengths and opportunities or other areas that need attention. For instance, if you find an opportunity to expand in a new market you can check whether the internal strengths your business has like well trained staff and the required technology to be able to use the opportunity fully.
You can also identify the weaknesses that prevent you from making use of the opportunity. This will help you make the necessary changes and improvements so you are better equipped to face the business growth plans and hit the road running.
Thus, the most significant part of the SWOT analysis is to have everything in perspective, compare, combine and arrive at the optimal blend of processes both internal and external to drive business growth.
Make A Reality Check
While you are focusing on the big picture like dealing with a big competitor threatening to make your business obsolete, you have to recoup and pay attention to the regular operations in your business. It is important to consider all pertinent issues big and small. This may include overseeing staff compliance, their capabilities, upgrading the equipment needed for your business and more.
And while conducting the analysis, make sure you utilize assistance as much as possible from others. This will make the analysis easier and more meaningful as you get to receive an outside perspective which will help you arrive at a better decision. Often the perspective from an inner viewpoint can muddle your processes. Considering other people’s outlook on the matter can give you the solution that has been eluding you so far.
And remember that the analysis is to be done periodically and not once in a lifetime. Since the internal and external factors affecting your business keeps changing constantly, it is prudent to use SWOT analysis as one of the ongoing business processes.
And last but not least is the fact that the analysis is just part of your business strategy and not a one stop solution for business growth. Use it as an adjunct to your business growth efforts and not the only basis for all your decision making process.
When done methodically, SWOT analysis can highlight the positive and negative aspects of your business, products and employees. It can also identify the influence of external factors like consumer behavior, market trends, technological impact, financial and legal issues, so you can be well prepared to safeguard your business and diminish the threats or use them as an opportunity to improve your business further.
The analysis is an extremely valuable tool for tweaking your business planning, as it provides a fresh perspective of where you are in the business growth curve and what you need to do to leap forward. With the analysis, you have the advantage of discovering a hitherto untapped area in the market or find a high risk hurdle that can wreak havoc with your business. When you make the necessary changes like reaffirming the strengths in your business and taking care of the weaknesses, you will be able to grab any new opportunity that comes your way and also counteract threats that impact your business.