How a SWOT Evaluation Can Help Your Business
Doing a SWOT Analysis: Take a Closer Look At Your Business
A SWOT analysis is an evaluation technique that helps you assess your Strengths, Weaknesses, Opportunities and Threats (SWOT) of your business or organization. You can download our free SWOT analysis template from the Tools and Templates page to help you get one setup for your business or organization. What’s great about a SWOT analysis is that it allows you to easily organize characteristics of your business in such a way that you can identify trends.
The SWOT Analysis Grid
On the SWOT grid, your Strengths and Weaknesses are often considered internal variables. In other words, these are elements that typically reflect your own internal resources, skills, structure, barriers, and limitations. Strengths are things you might want to advertise to your customers. For example, if your team of financial advisors are all CPAs, you may want to consider that a strength.
Weaknesses are things your customer may see as risks to them, such as your limited personnel, or your geographic location. You may consider it to be a weakness that your customers can not get all information about your products from your website. Further, a business that lacks a sales team to sell its products may consider its organizational structure to be a weakness.
In contrast, Opportunities and Threats are typically described as external forces – market and economic trends that can influence your business or organization. Opportunities may identify things on which you can capitalize, and may mirror the weaknesses of your competitors. For example, if your competitors are large firms who are slower to do business, you may have an opportunity to grab market share from their unhappy customers if you can move more quickly. Another example would be areas where you can leverage your expertise in a different manner. As an example, if you manufacture television screens, you may have an opportunity to also manufacture computer monitors.
Threats are external forces that could adversely impact your business. Examples include market trends that make you obsolete or insignificant. If you were a floppy disk manufacturer in the early 1990s, the CD-ROM would have been a threat to your business.
Questions to Ask As Part of a SWOT Analysis
To help you identify items for each of the categories, you may want to consider the following types of questions.
-Are there any elements of your business that make you especially valuable to customers?
-Do you have special skills within your business?
-What can you do better than your competitors?
-Are there features of your business that give you a unique advantage?
-Do you lack special skills within your business that competitors have?
-Are customers asking you for something you cannot provide?
-What prevents you from getting that order?
-Where are your competitors better than you?
-Are you able to do something your competitors can’t?
-Are there new trends that you are in a position to jump on?
-Do your strengths offer you the option of doing something else?
-What features of your business have you not shared with your customers?
-Is the industry changing to make your skills obsolete?
-Are your competitors doing something you’re not?
-Is your technology still relevant?
-Are your weaknesses life-threatening to your business?
How to Conduct a SWOT Evaluation
Just as the business environment changes frequently, your own business strengths and weaknesses will also change on a regular basis. Doing a SWOT analysis annually will force you to assess your business or organization on a regular basis to identify changes and improvements. The first couple months of the year offer a great time and mindset to do a SWOT evaluation as many businesses are establishing goals and objectives for the coming months.
Conducting a SWOT analysis in a group setting is an excellent way to go about evaluating your business. First, it serves as an open forum for employees to express their opinion regarding the state of the business. Second, it also collects the knowledge of your team members that you may not see yourself. Your sales manager, for example, may be aware of market trends that are unknown to product development manager. Third, going through a SWOT as a group helps you identify trends.
An Exercise that Worked for Me
I recently went through this exercise with my business. It was a large group of us – around 20 people. We started out with a large SWOT grid on the wall and a bunch of sticky notes on the tables. We were all asked to write any thoughts we had relating to a Strength, Weakness, Opportunity or Threat and place them on the grid accordingly. We later broke into 4 groups which were assigned one of the quadrants on the grid. Each group sifted through the sticky notes placed on their quadrant and organized them according to topics. I happened to be assigned to the weaknesses group. What we found was there were obvious trends. We had about 18 sticky notes with the word ‘slow’ written on them, but only two that mentioned our technology. We secured all the related sticky notes together, forming something that resembled a basic bar chart with the most consistent items having the largest “bars.” This gives you the ability to rank those items that are most prevalent.
Finally, the entire group went through each of the 4 quadrants to discuss the identified trends. What we found was that our strengths often played into our opportunities. In our case, our technical expertise of our products was rated high, which we felt tied to our belief that our ability to design better than the competition was an opportunity to gain more business.
The Final Step
Once you have your SWOT analysis done, the final step – and most important – is to drive action. If you don’t take action, the exercise will have been a waste of time. It’s unrealistic to jump on every weakness or pursue all opportunities. In our case we had about ten main themes in each category. We elected to put action plans behind the top 3 trends in each category.
One of the most valuable parts of doing a SWOT is identifying the trends, so you can more easily recognize them as you go about your business later. Revisit your SWOT regularly; even bring it up in staff meetings from time to time to look at the information. There are many ways to evaluate your business, but I have found that doing a simple SWOT is a good way to start thinking about how to improve and grow. Don’t forget to download our free worksheet to help you through this process, and let us know if we can help.