The origins of this humble strategic planning tool are not clear, and although it has definitely been around since the 1960s, don’t go thinking it’s out of date, useless and boring. NOPE! Never has there been a more useful tool needed in these uncertain, challenging, and changing times that businesses face. How businesses move forward needs thought and planning, and a SWOT analysis is a great tool to help with the post-COVID recovery.
I first discovered SWOT whilst at college, then applying it extensively throughout my degree, and now on my own business journey. I often recommend it to clients when they are reviewing goals and objectives or planning a new project. And it's great if you're a new business, as it gives you greater insight into how your business operates and an overview of where it currently stands in the market. This info can then be used for objective setting or benchmarking if you haven't already done this.
It's a great way of understanding where you are with your business and working out where you want to be! And the only cost involved is your time.
And SWOT isn't limited to reviewing the business as a whole, you can also focus in on certain aspects of the business by function, for example marketing, or a specific project or competitor, and even general problem-solving.
It works! It’s simple, super-effective, and practical - what more do you need in a strategic planning tool?
So what is a SWOT analysis?
I’m sure you’ve all heard of SWOT but it doesn’t hurt to go over the basics and give you a refresh. SWOT is an acronym for Strength, Weaknesses, Opportunities and Threats. It provides us with an opportunity to look at external opportunities and threats against internal strengths and weaknesses. This process not only looks at your organisation (or elements within it), but how it fits with the external environment in which it operates. It’s important to look at it this way because many external factors are outside our ability to control, but we can adapt our internal environment, thereby ensuring a good strategic fit and approach.
Strengths (Internal): These are both the tangible (eg property and assets) and intangible strengths the business possesses. These include your people, your brand, customer loyalty, product lines, financial position, unique differentiators (USP), resources available and reputation. What do you do better than the competition? It’s important to remember that if you operate in a high spec product market, then producing a high spec product is not a strength, it’s the standard.
Weaknesses: What are our weaknesses? Sometimes difficult to accept these exist, or even identify them, but an effective SWOT requires you to be honest with yourself. They could include not enough product knowledge/experience, outdated processes, poor customer service, poor reputation, outdated machinery or website, or even a narrow product line. Also, look at what are your competitors doing better than you to help better recognise your current weaknesses.
Opportunities (external): When looking at opportunities in the external environment we are looking for ways that can help us gain competitive advantage and business growth, but we need to be able to spot them. Opportunities could come from new technology, changes in law, developments in the current market, seasonal marketing opportunities, mergers/partnering and lifestyle changes.
Threats (external): Those opportunities identified above could also be threats especially if we don't identify them and the competition does. Changes in the law could have a negative impact on the business. Other threats include supply chain issues, market changes, changing consumer needs, technology, competitor price wars, debt and competition.
Where to Start?
You don't need any fancy app just a large piece of paper and a pen, or you could of course use a laptop. Print or draw out the grid below. Set aside some time, limit potential distractions and go through each of the areas.
Ultimately we want to turn our weaknesses into strengths or at least use our strengths to lessens any threats. Turn our threats into opportunities and ensure that we use our strengths to seize those opportunities. Be honest and realistic.
I find it always helps to step away and come back a few days later to review. Ask yourself:
What do your customers love/dislike about your product or service?
What problems or complaints have been raised?
What are the biggest obstacles your business faces?
What do you do better than your competitors?
Why do customers cancel or not complete their purchases?
What is your USP?
How is your brand perceived?
From previous experience, the best results are often obtained when getting input from more than one person (ie yourself). Having different opinions and views is invaluable as people think differently and those different thoughts produce different ideas and insights. But if like me you run your own business and don’t have a team to work with, try and rope in your partner or perhaps a coach if you use one. Someone that knows your business.
A successful SWOT analysis will:
Reveal your competitive advantage (USP)
Identify, and maximise opportunities
Provide you with a better understanding of the competition
Highlight areas where the business is vulnerable
Reduce weaknesses
Help you plan for the future ensuring contingencies are in place.
Have I convinced you? SWOT analysis is a great strategic planning tool that can be used by any size organization to identify its internal strengths and weaknesses, as well as its external opportunities and threats in relation to a project, business function or competitor research.
But of course, there are limits to what the SWOT analysis can achieve as certain external factors and situations are outside of our control. No one could have predicted COVID and the effects that it would have on business. But by identifying your business' weaknesses, you can manage threats quickly and ensure that your business is as prepared as it could be, and moreover is robust and able to adapt.