SWOT analysis focuses on addressing strengths, weaknesses, opportunities, and threats in business. It can be applied to the company as a whole, or used to assess specific departments, products, and marketing methods.
But what is the specific use of SWOT analysis? Overall, it can lead to better informed decisions and stronger success — no matter what success means to you.
Specifically, here is how each step in SWOT analysis can be useful to you.
Capitalize on the strengths
Strengths in your business are proof of what is working well. It’s the areas that shine and produce the positive results. And as such, it’s important to keep them flowing. The only way to do that is to identify specifically what areas are doing well. But also why they are providing such great results.
If you have trouble narrowing down on the specifics of your strengths, look at the data. High profit and sales numbers, for example, represent a product that is doing well on the market. Who is buying this product? And why are they picking up this specific product over others?
The “why” leads to uncovering more strengths. For example, a new package design helps to stand out on the shelves better than the competition.
Acknowledge the strengths. Examine why they work. Look at how you can keep it working or make it an even bigger strength.
Reduce the effects of weaknesses
Weak links will result in a loss. Whether that is profit, customers, or communication loss depends on the type of weakness in your business.
Weakness is in every business. What you do with that weakness is what differentiates you from the others. If you’re unaware of a weakness it can grow and slowly destroy from the inside. If you’re aware of it, you can tame it, reduce the effects, or turn it around.
But you need to be realistic. As much as we don’t want to acknowledge the bad, it is absolutely necessary for business survival. It’s like a leaky pipe. We can put a bowl under it to catch the drops and hope for the best. Or we can take care of the pipe itself before it implodes or causes thousands in water damage.
Pinpoint weaknesses. Create a plan (exterminate, reduce, or alter) to minimize damage. Watch the effects of your plan over a period of time.
Identify opportunities as they appear
Strengths work well with opportunities — if you can locate them. Opportunities are related to external forces and often need to be sought out to capitalize them. Shifts in trends related to marketing or your latest product can lead to opportunities, for example.
But you need to understand your strengths first. If you can take what’s working and combine it with an external opportunity, profits can be increased. If you receive continuous customer feedback, they may mention a shift in trends that your product kind of acknowledges. But if you were to take the feedback and adjust your product to what customers are suggesting, you may see an increase in satisfaction and profits.
Reassess business strengths. Listen and look for changes in the industry. Determine a plan to connect the strength to the opportunity. Analyze potential results.
Acknowledge threats before they hit
Threats can directly hurt your business, despite themselves often being external factors. By anticipating and proactively acknowledging threats, you can limit the negative effects.
Think about unexpected taxes. They can really affect your profits if they rise. Taxes differ by location, so if you expand into another state, the sales tax could be higher here than your original location.
SWOT analysis will help you not only be on the lookout for possible threats but also how to use your existing information (strengths) to counteract the potential damage.
Explore factors which could hurt business. List them related to urgency. Address how strengths could reduce threat results.
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