When you need to try and understand where your business stands in relation to your competitors, this is when a SWOT analysis can really be a benefit. SWOT stands for strengths, weaknesses, opportunities, and threats. Upon performing a SWOT analysis, you will better come to comprehend how you solve problems internally, how you interact with your customer base and also how you manage your productivity overall.
How to Go About Conducting a SWOT Analysis
As with anything, you need to plan when undertaking a SWOT analysis. Being prepared, asking the right questions and having all available data at your disposal during this review is absolutely critical in order for it to work.
Also, you want to work with a diverse array of employees, employees you know you can trust to do their due diligence and treat the exercise with the utmost seriousness. In the end, you will not only form stronger lines of communication amongst your team members, but you could definitely save the company money as well.
You will be creating a SWOT table from which to work. This is usually mapped out into four different quadrants—one for each of the SWOT components. You will also want to break it out according to internal versus external factors.
- Which processes have proven the most successful?
- List your most valuable assets
- Take into account those physical assets you have
- Evaluate what you do better than your competitors
- How could you be more competitive?
- What key areas need to be improved upon?
- What about your team—how could it be improved, what roles might be needed?
- Assess your location
- Do customers genuinely like your company?
- How is the current market growing?
- Are there any trends you can leverage?
- Can you hold any special events to build your brand?
- Are there any consumer trends that could undermine your company?
- How about market trends?
- Are customers leaving you?
- Is supplier quality lagging in any way?
- Are you keeping up with demand and technology shifts?
Why is This Exercise Important?
As a business owner, you obviously want a comprehensive picture of how you stand and where you're headed. By conducting this analysis, you take the time to dig deeper into the core of your company; you see where the strengths are and pinpoint weaknesses and as such, you have the information at your disposal to make changes if necessary.
Don't stress out about doing this particular exercise. Some company owners feel anxiety and pressure upon reviewing where their business currently is and where it may potentially be headed. But this can only make you stronger in the long run. So what are the main benefits of a SWOT analysis…
5 SWOT Analysis of Opportunities
Better Use of Resources
You only have so many resources at your disposal. Utilizing these in the most productive way possible is integral to your future success.
And with a SWOT analysis, a huge part of why you're doing it in the first place is to identify strengths, weaknesses, and opportunities and then allocate resources accordingly. It's all about understanding how to use your findings to make smart decisions for the business. Where can you compete most efficiently? Assign resources to this realm. What areas may require more support—you might then have to restructure your team in line with such results.
Ultimately while you are focusing in on strengths, the goal here should be to finetune the weaknesses and enhance those areas in which the company may be lacking. Your business cannot sustain any sort of health if the weaknesses are allowed to fester and grow. Maybe there's a great deal of waste. Maybe personnel isn't being utilized where they need to be. Perhaps a competitor has a leg up because you've yet to identify a key demographic. Whatever the weakness, you now need to work on improving it.
Discovering New Channels
It could be a new product line or maybe a new audience. Whatever the area, whatever the potential new channel, this is an exciting time to go for it. With your SWOT analysis complete, you have a clearer picture of which opportunities may be the most profitable as well as contain the most potential for growth. Discovering new avenues for success and growth allows you to put those resources to work in the right way.
Dealing with Risks More Efficiently
With a SWOT analysis performed, you now have the info required to not only identify potential threats and some of the risks that lay ahead, but you can also use your data to turn these into opportunities for your business. Avoiding a disaster down the road also means seeing opportunities where they may not have existed before. Many of the business decision you daily make is more about reacting to challenges and situations than anything else. This is what the T component of the SWOT exercise is all about—showing you when and where you need to react.
Devising a More Competitive Strategy
You always need to keep your eye on the competition—this is a cardinal rule of business. One of the ways that SWOT helps in this capacity is that it allows you to unearth those potentially hidden strengths and use them against your competitor. Perhaps this is where they are weak. Your strength can help you to come out on top here. But you have to be aware of it. By the same token, you also need to get a grip on those weaknesses so that the competition does not have the opportunity to leverage them against you.
Every business at one juncture or another needs to undergo a SWOT analysis—even if it is more informal. You want to be continuously improving, always looking for the gaps, and finding ways to strengthen the core of your company. You don't want to turn away from those factors that could spell disaster, but rather confront them head-on.