As a small business owner, you are often so focused on the day to day activities of running your business that you don’t take the time to sit down and really evaluate how your business is doing and how it compares to other businesses in the market. In order to help your business grow, it is key to get a clear idea of what your business does well and how it fits into the marketplace. A SWOT Analysis is a great tool for helping you focus on your business’ place and purpose.
SWOT stands for Strength, Weakness, Opportunity, & Threat. Through a series of questions and analysis, a SWOT Analysis can provide you with information on the strengths and weaknesses of your business, the opportunities it has in your market, and the threats it might face in that market. From there, you can use that information to better understand the strengths and weaknesses of your business, but also to uncover new opportunities. A SWOT analysis can also be used to evaluate how your business compares to similar businesses in the marketplace, which can help you craft a more effective business strategy to help your business grow.
So how does a SWOT Analysis work?
It can be as easy as sitting down with your staff and going over the following questions. It can also be helpful to involve some of your clients as well, maybe by asking them to fill out a simple survey. Here are some of the things to consider and ask from each of the four categories:
Strength – characteristics that give your business an advantage over others
- What do you do better than anyone else?
- What advantages does your business have over others in the area?
- What do your clients see as your strengths?
- What factors help you make sales?
Weakness – characteristics that leave your business at a disadvantage over others
- What could you improve about your business?
- What should you avoid?
- What do your clients see as your weaknesses?
- What factors cause you to lose sales?
Opportunity– instances or areas that your business could develop as an advantage
- What opportunities do you see in your marketplace?
- What trends are you aware of that could affect your business?
- Weaknesses can also often open up new opportunities. How could you improve or eliminate your weaknesses?
- Threats can also often be turned into opportunities. How can you take advantage of the threats and turn them around into new opportunities for your business?
Threat – instances or circumstances that could have a negative effect on your business
- What obstacles is your business facing?
- What are your competitors doing better than you?
- Do you have a cash flow problem, or debt?
Once you have all these answers, it’s a good time to sit down with your team and evaluate what those answers mean to your business. By identifying not only what you do well, but also what new opportunities there are out there, and how you will handle threats and weaknesses, you will come up with an overall big picture of your business. From there, you can start to discuss and plan out strategies for taking advantage of your strengths and opportunities and managing your weaknesses and threats. In the end, what should emerge is a business plan based on all of this, with ideas on how to leverage this new information to strengthen your business and bring about growth.
A SWOT Analysis is a simple but powerful tool for evaluating your business. By taking time on a regular basis (at least annually) to ask yourself these questions and evaluate what the answers mean for your bottom line, it can help you not only streamline your business practices but can help you better understand where your business currently is and what it will take to get it to where you would like it to be. It can also help you come up with effective strategies for distinguishing yourself in your market.
*** This article is part of our “Time for a Tune Up” series, designed to help you tune up your business practices, get ready for the holidays, and think about your business and marketing strategies, both for the rest of this year and heading into 2015. It’s not too early to start thinking ahead, and now is the time to start preparing for even more success.