Guest Article
A good business leader needs to know where they are strongest and where they are weakest in the course of their everyday operations. Understanding what aspects of a company that are pulling their weight and what aspects of a company have been underperforming is easier said than done, however. The SWOT analysis, which stands for Strengths, Weaknesses, Opportunities, and Threats, represents a common metric tool used to study and document a business’ strengths and weaknesses in order to better prepare a business plan to improve upon their existing performance.
Plan the objective
Just like you should never rush into developing a company without a solid business plan in place, so too should you never order a SWOT analysis without a firm idea of what you want it to accomplish. Each company has different needs: some need a higher profit margin, others need to move new products, others need to better saturate their brand amongst their customer base. What will be the objective of your SWOT analysis? Perhaps you want it to help factor into a decision, such as releasing a new product or re-branding your company, or perhaps you want it to determine which departments need to be re-organized.
Research the field
Any company leader can give a short description (or an “elevator pitch”) about their operations and products. Not all, however, can give details about the field of their industry and the scope of their customers and competitors. Begin a SWOT analysis by developing a comprehensive look at both your internal and external operations. Before getting started, talk with employees, clients, customers, and business partners to better get a picture of various perspectives. Then look up the information on competitors and your market niche in order to see where there is room for improvement and where the going is tough.
Order, order
Which aspect of SWOT you should begin with depends on your specific circumstances. Some consultants believe that it may be more valuable to focus on the external aspects of your company — the last two letters of the acronym, Opportunities and Threats — before you look inward for improvement. This is because Opportunities and Threats may be less malleable and less flexible than your own company’s capabilities for change. A good leader knows when to adapt and when to stay the course; whenever faced with external obstacles or rewards it may be worthwhile to consider tailoring a business plan to the current economic climate rather than to your business’ input and output.
Strengths and Weaknesses
The first two letters of the SWOT analysis focus on what your company does well and what aspects of your company could be improved. Strengths are usually straightforward: you likely already know what products are your major breadwinners, what departments do the heavy lifting, and what employees are leading the charge. Weaknesses can be more difficult to quantify, especially if you have little frame of reference: if you’re the only company offering a service, for instance, how can you be sure whether or not you’re doing it well? Weaknesses don’t necessarily need to be all finance related: look at your employees and processes. A project may be a weakness if it’s promoting low morale even if it’s keeping your company in the black. The scope of analyzing weaknesses is both big and small: what minute changes can be made, and what processes may need to be scrapped altogether?
Opportunities and Threats
It can be difficult to quantify both opportunities and threats — a new technology, for instance, could either help or hurt your company by either augmenting it or supplanting it — but remember not to confuse the two. A new corporate partnership or government institution has to be one or the other, never both. It’s perfectly fine to speculate within reason and report that an external influence, such as a political issue in another nation, can be a boon or an anchor on your company.
When you have the four separate lists from the SWOT analysis, you can begin to format a plan and invest resources to move your company forward. Make sure you do enough research to give yourself a comprehensive picture of both your company and the economic climate. Finally, be flexible in your future planning in order to ensure that a potential strength or opportunity does not become too menacing if it ever evolves into a weakness or threat.
About the Author: Lynsey Bowen works as a branding and marketing consultant and has a keen interest in internet marketing, SEO, web design and graphic design.
“SWOT Analysis Signpost” courtesy of scottchan / www.freedigitalphotos.net
As I was reading your “It’s Time to Start Planning for Q1 in Your Small Business” article, I was curious about what SWOT analysis was and so I read this article. Thank you for sharing this article. I just gained another strategy to monitor my business’ progress and what the key areas are to improve my business.