During my Marketing 101 class years ago, I learned about the SWOT Analysis, which is designed to assess the internal and external environment for purposes of strategic planning. Let me walk you through it.
SWOT stands for S(trengths), W(eaknesses), O(pportunities), and T(threats). Strengths and Weaknesses assess your internal environment, and Opportunities and Threats assess your external environment. Get out your legal pad and pencil. This is going to be fun.
Divide a piece of paper into four sections (or use 4 different pieces of paper, or a white board — whatever works best for you). Label each section with one of Strengths, Weaknesses, Opportunities, and Threats. The SWOT Analysis is customer- and competitor-focused. Be realistic and be painfully honest. This is an essential part of any serious business plan.
Strengths: What do you do well compared to your compared to your competitors? Don’t just pick one thing, pick several, if you can. What differentiates you in a good way from your competitors? Is it location, your number of products, the knowledge and skills you bring to the table? Is it your experience? You might be surprised at some hidden strengths.
Weaknesses: Where are you lacking compared to your competitors? This can be painful to assess, but if you do a thorough job, you can turn your weaknesses into strengths. A weakness may be that you may not know enough about what you need to know. Having it in black and white helps you define where you can improve — take some classes or upgrade your computer. Do what’s necessary. A lack of experience in your field will be a weakness that will leave you ill-prepared to address opportunities and threats, unless you’ve signed up for a franchise that will train you.
Opportunities: What are unmet needs in your market? Do you have an idea for something no one else has come up with? Is a new market developing? Maybe a service or product is offered in a large commercial market, but not in your region or city. Has a business closed, leaving a void? Another way to look at opportunities is what value can you bring to your market?
Threats: A new competitor in your market, a competitor who has lower prices than what you can reasonably afford to charge, competitors with better channels of distribution, new taxes and laws that will impact your operations, a competitor or 2 (or 10) with an established presence in your market are all examples of potential threats. Do vendors now approach your clients to offer your services? Print shops did this back when most of the print market tanked. All of a sudden, your printer was (and is) a web designer, too.
Do your homework
Now, dig in and research each of these areas as they relate to your business and what you want to do. Business journals are usually available for regions, and the business directories for the local chambers of commerce can be a fount of information. Even local lifestyle magazines’ ads and websites like Yelp can provide a clue as to who your competitors are and how they are doing. National business magazines and newspapers can alert you to developing trends, or give you an idea for a new trend to start. Magazines like Entrepreneur are full of advice for the newbie and not-so-newbie.
Keep a list of competitors’ web addresses, and check out their websites. A poorly designed and built website could indicate a competitor’s weakness. Maybe they are in over their heads, or it could indicate an established business and customer database, so they’ve stopped trying. Use these websites to continue to develop your analysis.
Find out the trade organizations for your business, and attend as many meetings as you can without joining. If you like what you see and learn, join.
A well-known strength or weakness is “location, location, location.” If have a clothing store in the middle of a business complex, you will definitely need to have a different marketing strategy than if you are in a mall.
You are never done analyzing
Keep developing your analysis. Maybe you had certain preconceptions about your competitors that are right or wrong. The jobless rate in your area, the rate of home sales, the number of office buildings going up, the number of empty office buildings, home sales, proposed business laws, the number of competitors closing shop, and the number of direct competitors joining you are an indication of the economic climate in which you’re operating.
Regardless of the business environment, many threats are the same. It could be as simple as prevailing weather, and as difficult as impacts of other countries — competitors there and tariffs, regulation and deregulation, competitors, and constant changes in technology.
Focus on a segment of your market when conducting a SWOT analysis. What drives the buyer decision process? Determine the Critical Success Factors (CSFs). CSF is a term managers use to describe the elements necessary for a project or company to be successful. Weight the CSFs. Separate out the factors most critical to your mission. What do people think of your business vs. your competitors’ businesses? Rank the opportunities that will best help your business, in relation to sustainability and profitability. Determine the threats. Then integrate the total analysis into your overall business strategy.
You may determine what would make your company stronger is to either specialize or branch out. You won’t know unless to do your due diligence, taking the pulse of your market. Make sure the decisions you make are supported by the analysis you’ve done.
There’s more to running a business than what’s in your office’s four corners. Business is strategy, and strategy is internal and external. Plenty of competitors are not going to appreciate a new kid on the block. A well-prepared business owner like you has a fighting chance to join the fun and be successful.
Your SWOT analysis isn’t engraved in stone — it’s a living, breathing document. Make a note in your calendar to do a new analysis annually — it will keep you agile, able to quickly make changes for your business success. And keep learning. You’re never done.
You know, I found that a SWOT analysis can even be applied to a major personal decision you need to make — take this job or that? Move to a house or apartment? Buy a big car or little car? Try it.
Let me help you strategize your business success. Contact me today!