Your business needs a good SWOT
To continue the growth and success for your business, you need to periodically step back and analyze what's going on. One of the best tools I have used for years is the SWOT Analysis.
SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats.
SWOT analysis was developed from research conducted at Stanford Research Institute in the 1960s and is an extremely useful tool for a deeper understanding for all sorts of situations in business and organizations. I have found it helps me balance the decision making process.
The SWOT headings provide a good framework for reviewing strategy, position and direction of a company or business proposition. It helps you to quickly identify and manage threats and uncover new opportunities. In most cases, you'll find strengths and weaknesses to be internal while opportunities and threats will be more external.
I prefer using it with a team of managers or all members of a department. Using a big dry-wipe board, I've found that the best way is to think fast and write down items as you think of them. Then go back and add and further define. Don't be humble when listing your strengths but be brutally honest in listing weaknesses and threats for it is through constructive criticism that they can be overcome.
Make a four box grid with the following headings and start adding items under each heading. Strengths, Weaknesses, Opportunities and Threats.
Here are a few general examples:
• In what ways are you better than your competition?
• Your organization's Unique Selling Proposition (USP)?
• Resources, assets, people?
• Experience, knowledge, data?
• Financial reserves?
• Marketing - reach, distribution, awareness?
• Price, value, quality?
• Lack of competitive strength?
• Reputation, presence and reach?
• Cash flow, start-up cash drain?
• Reliability of data, plan predictability?
• Morale, commitment, leadership?
• Poor quality control?
• New markets, vertical, horizontal? Technology development and innovation
• Geographical, export, import?
• Market need for new USP's?
• Market response to tactics, e.g., surprise?
• Major contracts, tenders?
• Business and product development?
• Partnerships, agencies, distribution?
• New regulations?
• New competitors entering market?
• Competitor intentions?
• Market demand?
• New technologies, services, ideas?
• Financial and credit pressures?
• Economy - home, abroad?
The SWOT analysis has multiple uses. The brains at Stanford Research Institute spent 10 years using SWOT with over 1,100 companies verifying that SWOT analysis is a powerful model for many different situations and is a valuable aid in the decision making process. Some of important Stanford examples of how companies use a SWOT analysis are:
• A company's position in the market, commercial viability, etc.
• Methods of sales and distribution
• New products or brands
• A business idea
• Strategic options, such as entering a new market or launching a new product
• An opportunity to make an acquisition (or be acquired)
• A potential partnership
• Changing a supplier
• Outsourcing a service, activity or resource
• Project planning and project management
• An investment opportunity
• Personal career development - direction, choice, change, etc.
You've probably guessed by now that I'm sold on SWOTing my business decisions. Completing a SWOT analysis is very simple, and is a good subject for workshops and brain-storming sessions. (See my article on think-tanks) The beauty of the SWOT analysis is that you can use it in a very quick and basic form or create a very detailed strategic assessment, as your needs require.
After using this powerful tool a few times, you will begin to look at things with a new mindset - one that automatically looks at various considerations and ideas that will help your business grow. By looking at your business, your competitors and yourself using the SWOT framework, you can start to craft a strategy that helps you distinguish yourself from your competitors, discover new opportunities, and compete successfully in your market.
So give your business a good SWOT to start the New Year and let me know how it works for you.
To your Success!
Steve Baker is a founder of successful businesses and a business advisor with a passion for every phase of business cycle from startup to exit. He's also a public speaker and author of "Pushing Water Uphill With a Rake," as well as an avid poor golfer. He welcomes your comments and e-mails at steve@PushingWater.com and invites you to visit his website www.PushingWater.com