How healthy is your business? Do a SWOT to find out...
Okay, times ahead are looking rough - but you're not going to be shortsighted and pull activity - instead you're going to consider how you can leverage upon your activity and get your house in order - so that you have a sharp pencil to work with. You've taken a step back and you’ve decided that there are numerous things you can do to improve your business. And, given that 'implementation is key' - you now you want to pull together a program to develop and improve your business. But where do you start? How do you select which areas to focus on initially – to ensure that resources, time, financials and effort are allocated appropriately?
SWOT analysis provides you with a starting point. A simple framework for analysing your business designed to help you identify the ‘health’ of your business – looking at Strengths, Weaknesses, Opportunities and Threats – hence SWOT.
Like many activities – outcome is dependent upon input. Therefore, it’s essential to look at all aspects of your business; industry dynamics, market growth, product development, culture, customer relationship management etc, etc. The more analysis you undertake, the deeper your understanding.
How SWOT Analysis Works
Generally, the SWOT analysis framework looks at all areas of your business from 2 perspectives;
- Internal Issues: Areas within the business, which the business owner has the ability to influence.
- External Issues: The environment within which the business operates. Areas of limited control such as, business climate, legislative issues etc.
So let's look at the practicalities of undertaking a SWOT...
Step 1 – Preparation
Set out what you want to achieve. The SWOT process helps you to highlight areas of greatest concern, and greatest comfort – helping you to identify where you need to take action to resolve any challenges.
It’s not a quick process. Most businesses, regardless of size, have a number of complexities to flesh out. The SWOT process may identify actions you need to take before you can continue with your analysis – you may need to undertake Market Research – a project in itself. Create a timeline, meet with relevant parties regularly and ensure that the SWOT is given the time it requires, to assess, discuss and monitor progress. Step 2 - External Issues
Opportunities and Threats often focus attention on the External Issues. Perhaps a threat is sited as ‘new technological developments’ – which may influence the sales of your product. However, this Threat could also turn into an Advantage – it could mean that your product would be in demand by those who don’t want to move forward with technology, or it could mean that you develop a new product offering with better features. The SWOT creates significant opportunity to brainstorm areas such as; trends, the current state of the business, and impact external issues may have on the business – covering 6 key areas:
1. Industry 2. Competition 3. Technology 4. Customers 5. Shareholder circumstances 6. The General Business Environment
Step 3 - Internal Issues
Analysis of your strengths and weaknesses should focus on the relative strength or weakness compared to your competition. The same principles apply – the current state of your business, trends within your business sector, and scope and impact.
1. Aspects relating to direction of the business
2. Aspects relating to the operations of the business.
- Products and services
- Marketing and sales
- Production and inventory
Step 4 - Implementation
Once you get through your SWOT, you will have spent a significant amount of time and resource, discussing, identifying, prioritising and brainstorming. By this stage, having gone through this process rigorously, you will have identified your core initial issues which need to be addressed.
And this is where the fun starts. You have undertaken research on your business – you have a clearer idea of key issues – and how to move your business in the direction you want to take it. There’s still a lot to do - but at least you are off first base.