What is this, Business 101 again? Yes, mention of a SWOT Analysis feels like you’re back in business school or working on your first business plan. I bet, though, that you also remember the SWOT Analysis as one of the fun parts of a business plan. It provides such a great, 10,000-foot perspective on the business and helps you put together a winning strategy that you can really get behind and turn into success. So, what is a SWOT Analysis?
What is a SWOT Analysis
A SWOT Analysis is a strategic planning tool to help you position your business within your market and your industry. The components that make up SWOT are Strengths, Weaknesses, Opportunities and Threats. As a bonus, you can also throw in an additional T (SWOT-T), Trends. Here’s a short description of the SWOT components:
- Strengths: What are your business’ strengths, relative to your direct competition and the market. These are internal. What do you sell, and how do you do it better than anybody else?
- Weaknesses: What are your weaknesses versus the competition and overall market. Again, these are internal factors. Where do you need to make improvements, or at least have plans to fend off attacks against these weaknesses by competitors and a shifting market. Are you lacking resources to compete in certain areas?
- Opportunities: These are long-term goals and are external to your business. Think sales and distribution channels, market sectors, etc.
- Threats: The biggest threats to your survival come from the government, competitors, shifts in the industry, etc. Again, these are external. If you think of an internal threat, that’s most likely a weakness.
- And sometimes Trends: What is the arc of your industry? A great case study is IBM, who has seen its products pivot from typewriters to personal computers to software to services to artificial intelligence. Where is your industry headed in the next ten years?
How to Conduct a SWOT Analysis
Create a four-quadrant table, and ask yourself some probing questions. Remember, this is an exercise to help you make strategic decisions for the success of your business, so be honest.
What products/services sell the best?
Which have the highest profit margins?
What product do you offer that your competition does not?
What do you do better, what capabilities do you have that others don’t?
Who is eating your lunch? How are they winning?
Is your business new?
Are you under funded?
Do you lack resources, team members?
What else keeps you from really beating your competition?
What products are not profitable?
New markets or geography?
Mergers and acquisitions?
Ask, how can any threats be turned into opportunities?
New marketing activities, such as PR or Advertising?
Big competitors, like Amazon or Walmart?
Are regulations on the way?
Are there disruptive technologies that might unseat your own services?
Fluctuations in cost of goods?
Any new or emerging competitors?
Access to qualified employees?
What to do with your SWOT Analysis
Now that you’ve completed this exercise, you’re going to do it again but with actions rather than observations.
For each strength, list how you will leverage the strength and what your ultimate goal is. For example, if your products are superior in quality, you can set the goals to increase pricing to reflect that advantage and update marketing communications to get that across to prospects.
For each significant weakness, write out a plan to either make improvements or defend against competitive attacks on the weakness. For example, if your pricing is higher due to a higher quality product, your goal can be to update marketing materials and train your sales force in communicating that fact. You may also position your products accordingly within your sale channels.
For each opportunity, list a goal to turn the opportunity into realized results. Be very specific, including dates and target numbers. For example, you may notice a new geography opening up in your market and want to be the “first to market” there. In that case, your goal might be, “Set up shop in <geography> no later than <date or milestone>.”
For each threat, write out how you will mitigate the risks and defend against it. For example, if your competitor is beginning to move services online or to an app, you might set a goal of having your own app developed and launched by a certain date. Of course, this threat can also turn into a strong advantage.
There’s no better way to complete your SWOT Analysis than with a good old brainstorming session, augmented with real business data — both internal and external. Gather all of your own records, business metrics, and performance data, along with numbers on your market and industry. Then, schedule a meeting with your business advisors or board of directors, and work out your SWOT Analysis.
Need help? Schedule a free SWOT Analysis Session with ASCEND!
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