When is the last time that you created a S.W.O.T. analysis? I’m sure you’ve heard the acronym before. Do you know what it stands for? Do you think this is something only large companies need to do?
If your answer to the first question was anything other than sometime within the last 12 months, keep reading.
Step 1: Analysis
S.W.O.T. stands for:
Strengths are internal to your company. They are things that you have the ability to influence and change. Examples of strengths are excellent customer service, a product that serves a need that no other similar products address, and an employee base with outstanding technical knowledge.
Weaknesses are also internal to your company. Again, they are issues that you have the ability to influence and change. Examples of weaknesses are business hours that are convenient to you but not your customers, lack of expertise in key areas, and an inexperienced sales force.
Opportunities are external to your company. They are things that you do not have the ability to influence or control. Examples of opportunities are a new technology that you are poised to leverage, pending legislation that changes your service from nice-to-have to must-have, and demographic shifts that will broaden the appeal of your product or services.
Threats are also external to your company. Again, you do not have the ability to influence or control whether they occur. Examples of threats are a growing customer base that is attracting competitors into your niche, an unsettled economic environment, and an aging customer base.
S.W.O.T. analysis does not need to take a long time. You can jot down ideas as you are working and organize them later. I also recommend that you get some outside input from someone who knows you and your company well. This is especially important in the area of strengths as most small business owners tend to overlook their greatest strengths.
Once you have written down all of the strengths, weaknesses, opportunities, and threats that you can think of give yourself no more than 60 seconds to read each list (you should have 4 lists) and quickly mark the 2 or 3 you feel is most important on each list. If you have someone you trust who knows you and your company well, ask him or her to do the same. If there are differences, this is an opportunity to have a discussion and receive a new perspective. Just remember, this is your company and you are the final arbiter of what is most important.
Step 2: Identify Strategic Opportunities
S.W.O.T. analysis is not something that only large companies should do. Small companies from the newest start-up to the seasoned solopreneur to the mom and pop shop can also benefit from S.W.O.T. analysis.
Use your S.W.O.T. analysis strategically by asking the following questions:
- How can I leverage the existing strengths to further differentiate my company or make it harder for the competition to catch up in this area?
- Which weaknesses are creating challenges that my customers do not appreciate or that have the potential to erode my market share? What can I change to make these weaknesses less important or turn them into strengths?
- Which opportunities is my company well positioned to take action on and take advantage of? What can I do now to be prepared?
- Which threats have the greatest possibility or ability to harm my business? What can I do now to minimize the impact or avoid it entirely?
Step 3: Implementation
As a small business owner you can realize more value from this process than larger companies simply because it is easier for you to mobilize and take appropriate action based on what you learn. Larger companies frequently get caught in analysis paralysis where they never actually finish the analysis and move to implementation. They also have many layers of management through which the results filter. These people may or may not take action that is prompt and in alignment with the S.W.O.T. analysis results. You, on the other hand, have the ability to go quickly from analysis to implementation.
If it is has been more than 12 months since your last S.W.O.T. analysis, or if you have never completed one, I encourage you to start working on it today. Then identify your strategic opportunities and take action on what you learn. This will propel your company’s growth
Have a great day!