“The framework for a SWOT analysis looks at the different dimensions of the business,” says David Wagstaff, director of business consulting at Capaldi, Reynolds & Pelosi in Marlton, NJ. “It’s really about strategy: What is it that makes your business successful? What are the things that can be improved on?”
Like a competitive analysis, a SWOT analysis, which looks at your company’s strengths, weaknesses, opportunities and threats, is an essential tool. It can be done during the planning and start-up phase and continued throughout your enterprise’s life cycle.
SWOT Analysis Tip #1: Get Objective Help
Although it’s possible to conduct a SWOT analysis yourself, consultants strongly advise seeking the assistance of a third party, whether it’s a firm you hire or a trusted friend you enlist for perspective.
“People fall in love with their own ideas and opinions,” notes consultant Dean Fischer, CEO of Chicago’s West Monroe Partners. That potentially blinds them to important considerations and conclusions that a neutral party can see more clearly. A SWOT analysis is meant to be “a sober look at your competence” through “both lenses: internal and external,” he says. And it can be tough to get complete, honest and truly helpful information when the business owner is the one asking the questions.
SWOT Analysis Tip #2: Include Many Perspectives
“The ideal SWOT analysis pulls together information from as many sources as possible,” says Wagstaff. “You want to get a full, holistic picture of the business.” This means not just research on hard numbers and other company and market data, but talking to management and employees, vendors and lenders, and even customers. “Each brings a different perspective.”
SWOT Analysis Tip #3: Understand the Relationships
A SWOT analysis breaks down into two pairs: strengths/weaknesses, opportunities/threats. But these categories aren’t mutually exclusive, so sometimes items can appear in more than one sector of the competitive matrix. For instance, it’s possible for a strength (like an experienced employee’s deep industry knowledge and solid track record) to also be a weakness (because she’s not open to new ideas and is resistant to change). Monitoring each quadrant in the competitive matrix helps you make better business decisions on where to dedicate time, effort, money and staff.
It’s also possible for an item in one quadrant today to appear in its counterpart quadrant tomorrow. Stop paying attention, and strengths (such as the quality of your staff) can become weaknesses (because you’re not investing enough in their training). On the other hand, threats (such as an aging customer base) can become opportunities (to court a younger or broader audience).
SWOT Analysis Tip #4: Consider the Future
Sometimes, opportunities and threats are not about who is number one in the market now, but who gets to market the fastest in the future. “I would argue that in today’s world, it’s tough to maintain a competitive advantage for more than six months,” says Fischer. “There’s a whole theory that says don’t be a market leader, be a fast follower.” In other words, if you learn that your competitor is considering a new service, product or client base, can you get there before he does?
“Businesses are moving to respond faster and faster, and information flows instantly,” Fischer continues. “You may have an advantage today, but how long will it last?” Conducting a good SWOT analysis can help you answer that question.
Marketing automation tools and real-time data can make all the difference in your marketing campaigns. Here’s why.
Creating holiday newsletters is a great way to inform your customers and get people in the door. This is the information you should include in them.
Managing finances can be challenging for any sm...
Do you secretly envy the coworker with the slee...
Now that your small business is big enough for you...
The experience of creating presentations and then ...
As a small business, your company culture separate...