We talk a lot about SWOT analysis here. SWOT analysis is applicable towards products and industries. But it’s primary used in business. It has plenty of benefits and your only expense is time and effort.
Each step in the analysis — examining the strengths, weaknesses, opportunities, and threats — provide you the tools to improve your business.
And you’ve got to start from the top.
SWOT helps you cultivate strengths
What makes you stand out amongst the competition? That’s the answer we’re looking for when we list strengths — the ‘S’ in SWOT analysis.
These strengths are your competitive advantage. And every single one works in your favor. Whether it makes you partner, teams, or investors happy; or keeps your customers begging for more.
Knowing your strength is one thing. Enhancing those strengths are another. But it all starts by listing them.
So how do you measure a strength?
You can use data. Key performance metrics on your business website and social media help to distinguish what customers enjoy. Perhaps they enjoy the updates on your Facebook page but barely notice your LinkedIn posts. Clearly, the update posts and Facebook are strengths to play up.
And you can check customer loyalty, customer retention rates, and employee performance scores. But make note why these are strengths and what that means for the future.
For example: high employee performance scores could be attributed to the new company incentive program you established. And in the future, that means an overall increase in the success of the business. Oh, and happier employees!
How to plug up weaknesses
You may find that you need a business restructure; things just aren’t working out. But why?
Once you know what the weaknesses are in your business, then you can inspect the damage. This may require a risk assessment or two. But if you’re going create a plan to improve the current situation, you’ve got to know where to start.
Some weaknesses may be glaringly obvious. If team members keep flocking to the competition, you take notice. Dwindling team members leave you scrambling to find replacements, increases costs to train new employees, and burns up time.
Other weaknesses can be minimum yet still impactful. Like a minor spelling mistake on your packaging. It’s small but can affect the image of your brand identity.
The weakness step in the analysis may take awhile. You want to be incredibly thorough and write down every and any possible weakness. Because you want to fix it before a competitor notices and exploits it for their own gain.
Realizing the Opportunities
Opportunities can expand upon strengths. Or they can reduce the impact of weaknesses. It depends on where you’re looking and the type of opportunities you want.
With strengths, there’s always an opportunity to expand upon them. Especially once you have your list of strengths.
Examples: you can create a new product based on your most selling product. Or you could reach out to top influencers in your industry after featuring them in your content.
But you can use weaknesses to create opportunities. That small spelling mistake on your packaging? You could create an entire campaign to highlight funny marketing mistakes, encouraging customers to share their findings on social media with a specialized hashtag.
Will it work out? Maybe not. But the opportunity is there.
You can also add in external opportunities. If your competitor is closing down shop, you might want to try and poach their best engineer. This also an example of using other’s weaknesses for your own benefit.
And by crafting this SWOT analysis you help your business see these little areas of importance.
Planning for Threats
Threats are similar to weaknesses. But they can happen from external forces. And there’s a chance their impact is low — if it impacts you at all. You can create a thorough list of external threats and factors when conducting a PESTLE analysis.
But also consider threats created by your competitor. If there’s only you and him in a niche business, he can affect the prices of your products. If he lowers them by 20%, you may find yourself having to do the same to keep up.
A big threat that affects every business is the economy. Think about the big real estate and housing crash. Or the many clothing store icons that have been closing doors in this country and in Canada. Being aware of these threats helps create a plan of attack, if the threats turn into reality.
And there you have it!
SWOT analysis highlights key areas to monitor, measure, and/or reduce to improve the overall state of business. You’ve got nothing to lose by doing it, but a whole lot to miss out on if you don’t.