What is SWOT Analysis?
SWOT Analysis is a way for you to check the environment surrounding your business, both internal and external. SWOT is an acronym that stands for:
Evaluating and analyzing these four components of your business environment will give your company a much more unobstructed view of where it stands in the market, while hopefully allowing you to discover the competitive advantage that makes your company so great.
Before your analysis, clearly define your product
First off, what is your good or service and what makes it stand out among similar products? Without clearly defining what you are offering to your customers, a SWOT analysis will be difficult to complete. Identifying your product is your starting point.
Examining the strengths and weaknesses of your company requires you to evaluate what is happening within your business. These are areas that you can control directly. It would be best if you were looking at areas such as production costs, financial resources, marketing skills, employee skills, branding, and technology.
Evaluating your company's Strengths
Strengths are things that your company does well. They are internal and positive attributes of your business that are within the realm of your control.
- What makes your business stand out?
- How do you know you will crush this year's goals?
- Is it unparalleled customer service?
- Where does your leadership stand?
- How is your response time to customers with questions and needs?
- Are you easily reachable?
- What extra resources do you have available to you that your competitors do not?
- Are members of your team extraordinary in some way?
- Are you involved in the community?
Questions like these are a good starting point to thinking creatively about the company's strengths. Make sure to get other members of the team involved. Include customers as well! A loyal customer may be able to tell you positive attributes of your business that you may have overlooked. (Hint: Listen carefully because these unspoken hallmarks would be considered a competitive advantage.)
Now let's take a look at Weaknesses.
Honestly, at Vested, we hate to call these weaknesses but rather Areas For Improvement. SAFIOT doesn't have the same ring to it though so we will stick to weaknesses for the sake of this exercise. Here are a few questions to reflect on to help you get started.
- Do you have a business plan implemented?
- Is your company's mission statement too specific?
- Is the technology your business needs to succeed up to date?
- Are you communicating effectively with your customers?
Even though they are not always easily fixable, weaknesses within the business are still under your control. Seemingly negative, this is good because it allows management to seek clarity and adjust for a better business plan moving forward.
The next steps in our SWOT analysis are Opportunities and Threats
Evaluating these two components requires an in-depth examination of the external market environment where your business operates. It is a collection and interpretation of information about forces, event, and relationships that affect both your business and the market it works within.
How to identify Opportunities
Opportunities are a space where you can take advantage of a gap in the market. Analyzing the strengths assessed earlier while comparing current opportunities may reveal an opening in the market where a profit can be made.
Although opportunities are generally seen as external and out of general control, you should also take a look at internal opportunities as well such as an employee who would benefit from increased training. Other questions you can use to look at potential opportunities are:
- What is the community demanding?
- Are there suggestions on your social media accounts?
- Who are your competitors and what part of the market are they serving?
- Are you able to accommodate the area lacking with a product or a service?
Threats are external factors you assess from scanning your market environment. They are often areas where your competitors are currently excelling or have a leg up over your business.
However, threats may also be specific social changes or political practices that will have an impact on your future profits. Often an opportunity, another threat could be improving technology if your competitor has access to it, but you do not.
Too many times before, companies have gone bankrupt (see Blockbuster) because they were unaware of looming technological boons just over the horizon. It is imperative to know what external threats will influence your business.
Questions you and your team should be asking in regard to threats are...
- What are our competitors offering that we are not?
- What is the technological situation of our business?
- Are we conscious socially?
- Will any laws be passed this year that will affect us?
- How is the market evolving?
Conducting a SWOT analysis is an easy and effective way to evaluate both the internal and external environments of your business, yet few companies take the time to do them. It can often be tough knowing where to start or where to look when conducting your SWOT analysis. At Vested, we have professionals that have worked in many different fields who can help your business complete an analysis and point your company in the right direction.
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
- Sun Tzu, The Art of War