You may have heard the expression "SWOT" analysis being thrown quite a lot when working on business strategy and for good reason - it's one of the foundations of identifying the current state of your business and therefore how you can make improvements.
A SWOT analysis can also be used to compare the services you provide with your competitors', determining where there's room for improvement and how you can continue to compete.
It will also help you identify market opportunities that you can fulfil, servicing your current customers and of course, attracting and maintaining new clients that may be looking for an alternative offering.
What is SWOT?
SWOT stands for Strengths, Weaknesses, Opportunities and Threats, therefore covering your current situation and where you want to be. It will ensure you can fully assess where your business stands now and where it can grow to fill gaps in the market.
Both internal and external factors are taken into account, and this will help you determine where you perhaps need to focus more attention. How can you turn around your weaknesses to address the opportunities, and how can you use your strengths to mitigate threats?
Because a SWOT analysis takes everything into account, including your current market position, it's a very effective tool in any business's arsenal.
This analysis should be run annually, approximately, in order to ensure you stay ahead of the competition, while start-ups and new businesses should integrate SWOT into the core planning process to ensure opportunities are maximised, and the scope for mistakes is reduced.
Where do I start?
In order for the analysis to work, you need to think about what you can add to each of the different four sections. Make sure that you're realistic, and be specific with each point you add. Be as clear and concise as possible.
It's also worth getting people in different parts of the company to carry out separate SWOTs as you can then compare them afterwards to draw a more complete picture of your organisation. This will help to bring your team together and ensure you all work in harmony to drive the business forward.
You then would usually draw a four square SWOT analysis template, similar to the image above. Here are some example questions to get you started for each section:
Strengths:
What do you do better than other companies?What do those in your market say are your strengths?What factors mean you sell your product/service?What is your USP?
Weaknesses:
What could be improved?What do those in your market say are your weaknesses?What makes you lose sales?
Opportunities:
What opportunities can you think of?
Is the perception of your business positive?
Do your strengths lead to opportunities?
Threats:
What obstacles does your organisation face?Are your rivals doing more than you? If so, what?Are you keeping up with modern technology? Or, has a new technology or product been introduced to make your product/service obsolete?Do any of these seriously threaten your business?
Make sure you prioritise the lists, and keep them up to date, so you know what is most important to you in each section.
Case study
In order to help you think about what to include in your SWOT analysis, we've included an example of Dell's one, which was carried out in the '90s.
Strengths:
Selling products directly to customersKeeping costs below that of competitorsHigher responsiveness to customer demands
Weaknesses:
No partnerships or strong relationships with computer retailers
Opportunities:
Increase in demand for one stop shoppingCustomers' increasing knowledge about what they want in computersInternet as a marketing tool
Threats:
Stronger brand name of competitors like IBM and CompaqStrong relationship of competitors with retailers
Strategy
Once you have collected all the necessary information and prioritised it, you can then begin to develop short term and long term strategies for your business. Try and look at how your strengths can maximise your opportunities but also minimise threats. In the same manner, see if the opportunities can minimise weaknesses or avoid threats too. Once you've compiled these into a strategy, remember to set up regular meetings where you can refresh your SWOT anaylsis and strategy to maximise your potential.
Conclusion
A SWOT analysis should help you to lay out all the necessary information you need on one page in a clear and concise manner. It should help your business by highlighting any areas that need to be changed immediately. You will have a deeper understanding of your competitors so you can adapt your business to get ahead of the game.
So, what are you waiting for?
Pictures: Bigstock
