How a SWOT Evaluation Can Help Your Business
How to Conduct a SWOT Analysis: Take a Closer Look At Your Business
Leading a successful company requires you periodically spend time identifying ways to improve and get better. A SWOT analysis is one evaluation method that aids in organizing characteristics of your business that you deem as successes or concerns. Specifically, a SWOT analysis is an evaluation technique that helps you capture the Strengths, Weaknesses, Opportunities and Threats (SWOT) of your business or organization. Unlike other business analysis methods, the SWOT technique allows you to easily identify trends and highlight areas where you should focus your attention. Using a real life example with step-by-step instructions, we will illustrate how you can conduct a SWOT analysis for your organization.
Overview of The SWOT Analysis Grid
Before getting to our real life example, let’s first introduce the SWOT analysis template. The SWOT grid is a table that is broken up into four quadrants: Strength, Weaknesses, Opportunities and Threats. Moreover, looking at the top two quadrants, 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. You have a great deal of influence over items in these two categories.
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Free MRH Download: Basic SWOT Template
Download our SWOT Analysis Worksheet to help identify the Strengths, Weaknesses, Opportunities and Threats (SWOT) of your business or organization. This template offers a basic framework and a series of questions to help you evaluate your organization. You can find all of our free templates on our TOOLS AND TEMPLATES PAGE. [/ezcol_1half_end]
Strengths are things you often want to advertise and showcase to your customers. For example, if your team of financial advisors are all certified CPAs, you may want to consider that a strength. You may also identify your reputation for product quality as a strength.
Weaknesses, by contrast, are things your customer may see as risks to them, such as limited resources, limited use of technology, or even your geographic location. You may also consider it to be a weakness that your customers cannot 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.
Struggling to Start a SWOT Analysis? Think About Your Customers
A great way to get started with a SWOT analysis is to think about your organization from the perspective of your customers. For Example:
- “Our customers love our rewards program.” (Strength)
- “Customers often say our prices are too high.” (Weakness)
- “Our distributor agreement now allow us to sell these products in another state.” (Opportunity)
- “Our competitor has invested in new manufacturing techniques.” (Threat)
Further, when conducting a SWOT assessment, think about more than just your products themselves, but how your customers interact with them. For example, brick and mortar movie rental stores eventually died because online streaming of movies became popular with consumers. In this case, online streaming technology was a threat to the brick and mortar movie rental business.
Looking at the lower half of the SWOT template, Opportunities and Threats are considered external forces – industry, market and economic trends that can influence your business or organization. They can also be used to compare you to your competitors.
Opportunities often mirror the weaknesses of your competitors, and include other aspects of the market where you can capitalize. For example, if your competitors are large firms who move more slowly, you have an opportunity to gain market share by acting more quickly to meet customer needs. Using your expertise to expand into new markets is another example of an opportunity. If you manufacture flat screen televisions, for instance, you may also have the ability to manufacture computer monitors.
Finally, Threats are the external forces that can adversely impact your business. Examples include market trends that make your business 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. Examples of threats can also include competitor moves, regulatory changes or technology trends.
Questions To Ask During a SWOT Analysis
Evaluating your own business or organization can be difficult to do. After all, it is not easy to think critically about what we have worked so hard to build and grow. Still, self-evaluation is an important exercise that helps you map out ways you can be better. So, to help you identify items for each of the four SWOT categories, here are some sample questions you should ask yourself. As you go through each question, you will likely uncover additional items of interest that pertain to your organization.
Questions Identifying Strengths (Internal):
- 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?
Questions Identifying Weaknesses (Internal):
- Do you lack special skills within your business that your 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?
Questions Identifying Opportunities (External):
- Are you able to do something your competitors can’t?
- Are there new trends that you are in a position to capitalize on?
- Do your strengths offer you the option of doing something else?
- Are there features of your business that your customers do not know about?
Questions Identifying Threats (External):
- 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 well can customers access your products and services?
When and 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 conduct a SWOT evaluation because many businesses are measuring the last year’s performance and establishing goals for the next 12 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 opinions regarding the state of the business. Second, it also collects the knowledge and perspective of your team members that you may not be able to 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 cross-functional group helps you identify trends that affect the entire organization.
A SWOT Exercise From My Business
I recently went through this exercise with my business. It was a large group of us – around 20 people – with each function of our organization represented. Here are the steps we followed to conduct our SWOT evaluation.
Step 1: We started out by placing a large SWOT grid on the wall (We actually used 4 large pieces of paper to represent each of the four grids). We then placed several stacks of sticky notes on the conference room table in front of our staff.
Step 2: Next, members of the leadership team individually wrote down thoughts they had relating to a Strength, Weakness, Opportunity or Threat they saw within our organization. They were asked to place one “item” on each sticky note.
Step 3: Once they had several items written down, each member of the staff placed his or her respective comments on the grid where they saw fit. After all notes were placed on the grid, each of the four quadrants contained a large number of sticky notes with hand written comments.
Step 4: After each person had contributed their items, we divided the entire leadership team into 4 groups, each of whom was assigned one of the quadrants on the grid.
Step 5: Each group then sifted through the sticky notes placed on their quadrant and organized them according to topics.
A Real Example:
“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. This suggested that our speed of doing business was generally viewed as a problem, while our technology gaps were of less concern.”
Step 6: After the sticky notes were grouped, we secured all the related sticky notes together, forming something that resembled a basic bar chart with the most consistent or repeated items having the largest “bars.” This was an easy way to rank the items that were most prevalent.
Step 7: Each group presented their findings from their quadrant to the entire leadership team, and discussed their assessment of the identified trends.
A Real Example:
“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.”
Step 8: Finally, after all findings from all four quadrants were shared with the wider team, we began to discuss themes, issues, and actions. Throughout this, additional items were uncovered, and added to one of the four quadrants.
The Final Step of a SWOT Analysis
Once you have your SWOT analysis done, the final – and most important – step is to drive action. If you don’t take action, the exercise will have been a waste of time. However, it’s unrealistic to jump on every weakness or pursue all opportunities. Therefore, focus on those items you feel are the most important.
A Real Example:
“In our SWOT study, we had about ten main themes in each category. We elected to put action plans behind the top 3 trends in each of the four categories.”
One of the most valuable parts of doing a SWOT assessment is identifying the trends, so you can more easily recognize them in the future. 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 a simple SWOT is a great way to start thinking about how to improve and grow. Don’t forget to download our free worksheet to help you through this process.