A SWOT analysis is used to fine-tune your business strategy by examining your internal and external factors influencing the growth of your business. It is the most recommended process when it comes to conducting business health checks. It is a cornerstone of your business strategy.
What is SWOT Analysis?
S.W.O.T. is an acronym for Strengths, Weaknesses, Opportunities, and Threats.
Basically, SWOT analysis is a business health check tool that lists the strengths, weaknesses, opportunities, and threats to your business. It is a diagnostic tool to identify the potential and critical issues affecting your business.
Strengths and weaknesses are internal to the company and somewhat are controllable variables. On, the other hand, opportunities, and threats are the external factors that could benefit or harm your business. You cannot change them so you need to adapt your company according to the situation.
SWOT analysis is a kind of a small business health check used to make business plans or strategies to maximize the positives and counteract the negatives.
How to perform a SWOT Analysis?
A SWOT analysis can be done either by a single person or a group of people depending on the size of your business. The step involved in performing a SWOT analysis are:
Analyzing your Business’ Strengths
Strengths are the positive factors of your business. These include the positive attributes, tangible and intangible, internal to your organizations that are within your control. Strengths should reflect the specific areas in which your business is the most successful and can, therefore, be leveraged to achieve your goals.
For instance, the Unique Selling Points (USPs) of your business can be considered as your strengths. You can add every business element to your list of strengths that adds value and offers you a competitive advantage. This could be your expertise in the field, brand strength, customer base, etc.
To further identify your strengths, you can ask yourself the following questions:
- What is your business good at?
- What internal resources do you have?
- Do you get regular company health checks done?
- What advantages do you have over your competitors?
- Can you perform profitable research for your business?
Analyzing your Business’ Weaknesses
Weaknesses are the negative aspects of your business that detract your ability to obtain or maintain a competitive edge. These are the internal factors which need improvement.
They are the qualities standing in the way of accomplishing business goals and achieving success. These are the liabilities that lead to failures. They should be minimized or eliminated.
To identify your weaknesses, you can ask yourself the following questions:
- Which factors are preventing you from competing with your strongest competitor?
- Why is your business unable to achieve maximum output?
- What does your business lack in terms of technology, expertise etc.?
- Do you get at least one business health check done per financial year?
Identify your Opportunities
Identifying opportunities can be a tricky thing. The external factors that symbolize the incentive for your business to grow and thrive in the marketplace are referred to as opportunities.
These opportunities reflect the potential for your business to succeed through the implementation of your marketing strategies. Opportunities may present themselves as a result of market growth, lifestyle changes, resolution of problems associated with current situations, positive market perceptions about your business, or the ability to offer greater value that will create a demand for your services.
Identify your potential threats
Threats endanger the stability and viability of a business. Threats are external factors beyond your control that place your marketing strategy or business at risk. Though you have no control over these factors, but a contingency plan may help you in addressing such threats.
Early recognizing of threats is the only way to control the outcome of your business. A threat can be something like new entrants in the market, competitors coming up with an improved version of a product etc.
Other threats are price increases from suppliers, unfavorable government measures, economic slump, unfavorable reviews or media coverage, the introduction of new technology that might detriment to your business etc.
To detect the potential threats to your business, you can ask yourself the following questions:
- What are the strategies of your existing/potential competitors?
- What factors are beyond your control that could place your business at risk?
- What situations might threaten your marketing efforts?
- Has there been a significant change in the supplier’s prices or the availability of raw materials?
- Have there been significant shifts in consumers’ behavior, the economy, or government regulations that could reduce your sales?
Why should SWOT Analysis be a part of your Business Health Check?
SWOT analysis is a strong tool and should be used as a guide. Successful businesses build their strategic plans according to the SWOT reports.
A timely SWOT analysis should be a part of your business health check as:
- It is a valuable resource for setting up optional/emergency plans
- It carefully builds the business’ strengths
- It reverses the business’ weaknesses
- It protects against external threats
- It helps in seizing the opportunities faster than our competitors
- It helps in setting further objectives
- It helps in synchronizing the business’ resources with the competencies
The SWOT analysis gives birth to the seeds for an action plan thus, providing a clear path for businesses to undertake in order to succeed.
There are numerous online companies who provide a SWOT analysis and a business health check for small as well as large businesses. Business Propel is one such trusted firm that follows a step by step process to develop a plan to improve your business’ growth.