A SWOT analysis is a simple and highly effective planning tool for your business. It is something you may have heard of before or already use to an extent. It allows you to generate more oversight and insight of your business internally and externally through which you can set goals to reach your business objectives.
Let’s start with the basics. What does it stand for: Strength, Weakness, Opportunity, Threat. Strength and Weaknesses generally will refer to internal capabilities of your business. A strength might be something like a patent, exclusive rights, key partnerships, etc. Something that gives you the upper hand within the market you operate. These sorts of things you will utilise to set yourself apart from your competitors.
Weakness could be things like resource limitation, operational restrictions, low market share, etc. Anything that could be a short fall within your business where competitors may get the upper hand. It is something you would focus on to put steps in place to counter act the short fall (risk) to strengthen your business. Opportunities (customers, clients, incentives, developments, etc) and Threats (competitors, regulation changes, access limitations, etc) will generally refer to external factors. Factors that exist outside of your direct control that your business can either benefit from (opportunity) or can be at risk from (threat). When you identify opportunities, you identify if is something you want to target and then set a plan to benefit from the opportunity. Threats on the other hand, you assess the risk these pose and impact to your business. You then set a plan to mitigate these threats.
If you have come across a SWOT analysis before, you have likely seen this in the form of a square broken into four sections. What we have found to be more practical for effective planning of your business is expanding the traditional SWOT model across a more detailed template structure.
In this month’s newsletter, we have attached a base template of what we regularly use with clients. This allows you to identify strengths, weakness, threats, opportunities and then forward plan accordingly.
Before compiling a SWOT, you want to have some background knowledge, oversight and insight. You should already have a good base of knowledge for the internal components (strengths and weakness). A great way is to include your team on this process during a planning meeting. The more input, the more perspectives and experiences that can be shared, the more comprehensive the analysis which helps to minimise the risk of missing or overlooking something. Don’t be afraid to look outside of your business or team for input. This helps remove bias from the equation.
You may need to do some research for external factors for threats and opportunities. Again, if you have been in business for a while, you should have a feel for this. However, it never hurts to look further. Do some market research, seek trends within the industries you operate. These are all things you can discuss with customers, stakeholders and partners. The more oversight you can gain, the better you can position yourself. Often the greatest risks are those we don’t see. A good thing to always keep in mind: we don’t know what we don’t know.
Frameworks and models like the SWOT analysis can assist greatly in minimising risk and conduct effective planning to be competitive in the market. If you aren’t already do something similar, give it a go and utilise the template we have made available for you this month.