By: TSP Blog | @TSProckstars
You probably learned about a SWOT analysis in school, but when is the last time you applied it to your business? It’s easy to get caught up in the chaos of everyday tasks, but taking time to evaluate your company’s strengths, weaknesses, opportunities and threats is a great way keep your business plan on track.
Existing businesses can use a SWOT analysis at any time to assess a changing environment and respond proactively. It’s a best practice to conduct a strategy review meeting at least once a year that includes reviewing your company’s SWOT analysis. New businesses should also use this analysis as a part of their planning process.
There’s no “one size fits all” plan for your business, so it is important to think of your new business in terms of its unique characteristics. This will allow you to establish a roadmap for the company right away to save you from a lot of headaches later on.
HOW TO CONDUCT A SWOT ANALYSIS
To get the most complete and objective results, your SWOT analysis should be completed by a group of people with different levels, perspectives and stakes in the company. It’s important to include a person from each division of the company, including management, sales, customer service and others to get a well-rounded pool of responses. This is an opportunity to bring your team together and encourage them to participate in the growth of the business and company’s resulting strategy.
A SWOT analysis is typically conducted using a four-square template. Consider holding a brainstorming session with your team to identify the factors in each of the four categories. You can also ask your team members to individually complete the SWOT analysis, then meet to discuss and compile the results. Once you’re finished brainstorming, create a final prioritized copy of your SWOT analysis.
Strengths describe the positive attributes internal to your organization — these are within your control. When starting to think about your company’s strengths, consider what internal resources you have, like positive attributes of people or tangible assets of the company.
Ask the team the following questions to prompt the conversation:
- What advantages does the company have over conversation?
- Does your company have strong research and development capabilities?
- What other positive aspects add value or an advantage over competitors?
These areas of focus will help jumpstart your SWOT analysis conversation.
Weaknesses are internal, negative factors that affect your business and detract from the value you offer or place your business at a competitive disadvantage.
Some things to consider when evaluating your company’s weakness are:
- What factors, within your control, detract the company’s ability to obtain/maintain a competitive edge?
- What areas of your business need improvement to accomplish your objectives and compete with competitors?
- What does your business lack?
- Does your company have limited resources?
- Is your business in a poor location?
Giving an honest answer to these questions might be tough, but it’s imperative to the business’ success that you’re fully aware of the weaknesses in your company in order to enhance your services and beat out competitors.
Opportunities are external, positive factors that affect your business. These points represent reasons your business is likely to succeed and prosper.
Here are some important questions to evaluate in this section of your SWOT analysis:
- What opportunities exist in your market that you can benefit from?
- Is the public perception of your business positive?
- Has there been market growth or other changes that create an opportunity for your company?
- Is the opportunity ongoing or time bound? How quickly do you need to respond and take action?
Opportunities need to be established to evaluate the opportune time to take action and make a positive impact on your company. Failing to be aware of important moments can be detrimental to your company’s success, so continue to update this portion of the SWOT analysis as your business grows to maintain prosperity.
Threats are external, negative factors that are beyond your control and put the business at risk. These are things you have no power over, but including them in your contingency plan is beneficial to your company, should they ever occur.
Some questions to prepare for potential risks are:
- Who are your existing or potential competitors?
- What factors, beyond your control, could place your business at risk?
- What are your current challenges that may lead to a decline in revenue or profits?
- What situations might threaten your marketing efforts?
- Has a new product or technology been introduced that makes your products, equipment or services outdated?
These potential threats could be as realistic or unrealistic as you make them — It’s always best to prepare for the worst-case scenario.
Once you and your team have identified and prioritized your SWOT analysis, you can use the results to develop short-term and long-term strategies for your business. The true value of this exercise is to evaluate the outcomes and maximize the positive influences on your business and minimize negative ones.
Once you’ve developed strategies, be sure to schedule regular review meetings to evaluate your business plan and decide if anything in the SWOT analysis can be updated.