If you own a business, you already know that operating it is never a static process. There are constant changes to consider in both the market at large and in your industry, as well as the ongoing process of managing operations in such a way that empowers your employees and lifts up your product. It can be a lot to maintain all at once, which is why it is imperative to take the time to analyze your business and determine both its present and future status. This is where the idea of a SWOT analysis (strengths, weaknesses, opportunities and threats) comes in handy.
What is a SWOT analysis?
Janice Hui, writing for CBS News’ MoneyWatch, explains that a SWOT analysis’s purpose is “to discover what you do well; how you could improve; whether you are making the most of the opportunities around you; and whether there are any changes in your market — such as technological developments, mergers of businesses or unreliability of suppliers — that may require corresponding changes in your business.”
Investopedia defines a SWOT analysis as an analytical framework that, simply put, measures what a business can and cannot do. A proper SWOT analysis will consider factors both internal and external — typically, strengths and weaknesses are the former and opportunities and threats represent the latter. By laying these elements out and having a candid conversation about them, you will be better positioned to devise a strategy and a course of action.
Moreover, Small Business Bonfire founder Alyssa Gregory explains in The Balance that a SWOT analysis can be utilized in a range of situations and scenarios. Whether you are putting together a business plan to get your idea off the ground, developing a marketing strategy to maximize your market potential or looking to optimize your operations, a SWOT analysis is an exceptional tool to help your business succeed.
How to conduct a SWOT analysis
Gregory notes that a SWOT analysis is also dubbed a SWOT matrix because of its typical format. A SWOT analysis is commonly laid out in a two-by-two table where strengths and weaknesses (internal factors) occupy the top row and opportunities, and threats (external factors) occupy the bottom row. This effectively creates two columns, with strengths and opportunities representing positives and weaknesses and threats representing negatives.
The process of supplying data for each quadrant is as simple as asking yourself and then answering a series of questions. When determining your strengths, you should be thinking of things that you do well or better than your competitors and the aspects of your business that are most profitable. Concerning weaknesses, Investopedia lists examples including debt, lack of capital or resources and high turnover rates.
For opportunities, consider those competitive advantages you might be able to exploit or assets that you could better utilize — this includes using your current customer base, improving your reach to your target demographics and leveraging new and emerging technologies. For threats, you’ll want to take a candid look at your competitors and what they do as well as or better than you, at the direction of the economy and your market and various worst-case scenarios.
This information should then be analyzed with the goal of determining your strategy and approach. If you have conducted a basic SWOT analysis and want to utilize that information in more strategic terms, you can try the somewhat more complex approach put forth by Steven D. Peterson, Peter E. Jaret and Barbara Findlay Schenck, authors of “Business Plans Kit for Dummies.” This SWOT analysis takes on a grid format where each quadrant combines two of the four factors — the top row combining strengths with opportunities and threats and the bottom row connecting weaknesses with opportunities and threats.
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This helps to set a clear path to actualizing your analysis with strategy. Where your strengths and opportunities cross, you can build; where your weaknesses and threats intersect, you can move to eliminate; where weaknesses and opportunity overlap, you can improve; and where threats and strengths overlap, you can monitor. If the growth of your market is seen as an opportunity, but a lack of internet marketing is viewed as a weakness, you can create a plan accordingly.
Conducting a SWOT analysis is as useful an approach while expanding a thriving business as it is during the initial planning stages of a startup. By asking yourself the critical questions and taking the time to look both around you and ahead of you, you will empower your business not just to maintain its current success, but to thrive in the days to come.
Contact the Minster Bank Private Wealth Management team for advice on new opportunities for your business.
Published by Minster Bank
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