When trying to get a better understanding of your business, it is often necessary to perform a Strengths-Weaknesses-Opportunities-Threats review – better known as a SWOT analysis.
A breakdown of what makes your company tick – and where it can improve – a SWOT analysis is usually designed to assess an organisation as a whole. However, it can also be used to scrutinise niche areas of your business, such as a particular product, a specific team of employees, or even a store location. This flexibility is one of the reasons SWOT analyses are so prevalent in senior management circles.
So how do you go about conducting one – especially if you are a small business without the resources to hire external consultants?
Luckily, the process is more straightforward than you may think. To get you started, we've compiled a handy guide on how to approach each aspect of the review, and what your findings can mean for your company.
This is how to perform a SWOT analysis of your business.
1. Think About Your Strengths
First and foremost, you need to assess what your company's strong points are. What makes you stand out from the rest of the crowd? What is driving its current success?
To answer these questions, you need to look at your business internally. What are your primary assets? Is it your human capital? Your intellectual capital? Or are you able to maximise your marketing and branding strategies for optimal returns? Maybe your success lies in the uniqueness of your product, or your ability to build strong relationships with your customers.
Once you have established your fortes, document and summarise these points. Once you have identified what your business strengths are, you can focus on maintaining these facets, and evolve and improve them as you focus on driving growth.
2. Reflect on Your Company's Current Weaknesses
Every company has its weaknesses, regardless of whether they are a fledgeling startup or a corporate multinational, and a proactive SWOT analysis will make you aware of as many of these problems as possible, in order for you to begin mending them.
Start by reflecting on your major operational weaknesses, as well as any business processes that may need improvement. Maybe you are struggling to keep up with current market trends, or you're understaffed in critical positions. Perhaps your supply chain could be more efficient, or your marketing strategy is not heralding the returns that you would like.
Though you will not necessarily be able to rectify every one of these issues immediately, becoming aware of them is a critical first step in doing so. Begin by itemising your limitations and flaws before listing them in order of severity. The items at the top should then be your priority, and you should begin working on addressing these weaknesses immediately.
3. Deliberate on any Potential Opportunities
Any business that has had even a modicum of success will likely point to one defining moment in their journey: the ability to identify – and seize upon – an opportunity.
This is an especially important part of the SWOT process, as external market conditions can change quickly. You can be sure that your competitors are continually looking for ways to gain an edge, so assessing potential growth opportunities is an essential process for any company that is seeking to grow.
Your findings don't necessarily have to be reactionary, either; you might be able to identify opportunities that are viable on their own merit. For instance, if you operate a bricks and mortar store, there could be the capacity to expand your operations online (or vice versa). Alternatively, an innovative marketing opportunity might present itself, or you could identify changes in your supply chain that could save costs and improve efficiency.
Once again, you should create a list of items and prioritise what you believe is realistic in the short term. Then, you should actively plan on how you can exploit these opportunities over the coming months.
As a side note, be aware that anything you list as an opportunity – such as launching a new product, for instance – cannot also be listed as a threat, even if it represents a potential risk.
4. Consider Your Conceivable Threats
Lastly, and perhaps most importantly, your business must take into consideration any conceivable dangers that may arise for the company, either in the short term or the long term. By actively taking the time to foresee any major issues that could occur, you are engaging in a preventative measure that could save you a lot of harm further down the road.
When considering threats, ensure that you look at any socio-economic or political changes that could affect how you operate. Are there any corporate tax hikes on the horizon? Is your industry facing significant regulatory and compliance changes? Are there potential customs issues that will make it difficult for you to ship your products?
Focus on your relationships with customers, too. Are you receiving bad reviews on social media? Are you getting too many complaints? Have your competitors released a better version of your product?
Finally, don't ignore what's going on inside your company, either. Is there a serious skills shortage within your workforce? Are there any conflicts or concerns that could derail your ability to grow? Some threats can be as a result of your own making, so ensure that you work closely with your employees to identify anything you may have overlooked.
Once you have determined what could pose a threat to you, either now or in the future, then you can begin to take measures to avoid them, or at the very least mitigate them.
Once you have thoroughly conducted your SWOT analysis and have laid out your business' strengths, weaknesses, opportunities, and threats, you can begin to develop an appropriate strategy to address everything. Depending on your industry and the state of your organisation, your list may be small, or it may be exhaustive; the most important thing is to prioritise what you can address quickly and to take action on it.
A SWOT analysis can also help you identify how to leverage your positives to directly counter your negatives. For example, if one of your strengths is a highly-skilled workforce that is overflowing with ground-breaking ideas, then this would be an excellent way to counter a weakness such as falling behind your competition. Moving forward, you can vow to involve employees more in the creative process, or lean on their ideas to create marketing campaigns that will once again boost your brand within the market.
Learning how to perform a SWOT analysis is a critical step towards bettering your company, whether you are just starting out or you have long since been established. It's a responsible action in preparing yourself for a successful future, and being aware of how your business works is vital to ensuring that it can breathe and grow.
What are the issues facing your business? Has SWOT analysis helped to address them? Let us know your thoughts and experiences in the comment section below.