SWOT your way to the top! That should to be the mission statement for every business today. SWOT analysis is an acronym for Strengths, Weaknesses, Opportunities, and Threats. In fact, SWOT analysis is considered to be one of the most beneficial tools any business has at its disposal.
What’s so special about SWOT analysis? When utilized correctly, a business (large or small) can run its operations more effectively, generate a positive bottom line, and take advantage of any new opportunities, as well as diminish any possible threats to the business. When a business invests the time and energy in developing a detailed SWOT analysis, the business places itself in a good position to better plan for the future and potential long-term success.
For those businesses who haven’t developed a SWOT analysis chart, now’s the time! A business of any size can’t be ready for the future without planning in the present. A SWOT analysis is the perfect starting point to help prepare a business for any changes it needs to implement in order to surpass the competition. A SWOT analysis forces a business to reflect on how it can utilize its competitive strengths to expand its market share. At the same time, a business should pursue possible opportunities to improve upon its weaknesses as well as lessen those threats which could jeopardize the future of the business.
A SWOT analysis fits all sizes. For example, a SWOT analysis can be developed for as big as an entire business or as small as a particular product/service line department. For any business, what better way to “SWOT your way to the top” than with a SWOT analysis.
Here’s a closer look at the ingredients which comprise a SWOT analysis:
Strengths
The strengths of a business can be easily stated as those services and/or products which the business excels at. Those characteristics could range from an experienced staff to a strong financial balance sheet. Clearly, those identified strengths could be short or extensive. However, it is blend of all of those strengths which make a business a valued organization as well as give that business an edge over the competition.
Weaknesses
On the flip side, weaknesses are those things a business does not excel. Or, a weakness could be something the business doesn’t have. For example, a business could be a leader in its industry, but doesn’t have the funding to purchase the necessary technology to expand operations. The more weaknesses, the more a business could find itself at a competitive handicap. A competitor business with more strengths could overwhelm the business considered to have more weaknesses.
The list of weaknesses can also be a small or large list. Additional examples of weaknesses are high production costs, lack of proficiency in its industry, or a lack of well-trained and experienced employees.
For any business to thrive and survive, its SWOT analysis must feature more strengths than weaknesses. Otherwise, the future may not be a bright one for the business.
Opportunities
Opportunities are those prospects which can separate a business from its competition. Taking advantage of an opportunity when it presents itself can be the difference for a business experiencing either a profit or loss. As with anything in life, some opportunities are logical to explore, while others are not because of the lack of capabilities and resources.
The economy, customer demand, or product inventions may create the environment for opportunity. So, when does a business pursue a potential opportunity? Timing is everything. Therefore, a business must ensure that it has the money and qualified people to go after an opportunity before the competition jumps into the picture. Finally, the opportunity must have the capability to produce positive income for the business.
Threats
As for threats, they are everywhere. These threats could negatively impact the ability for a business to generate a positive bottom line as well as weaken its competitive advantage. Sometimes a business has no control over a specific threat. For example, a business can’t do much about a major spike in inflation, an economic recession or a natural disaster. To help combat these threats, a business should have contingency plans in place to offset any negative impacts from these threats. For example, establishing a reserve fund may help lessen the blow in case of a slowdown in business operations due to a major natural catastrophe.
Ready…Set…Do It
Developing a SWOT analysis doesn’t require the fastest computer operating system. A blank sheet of paper and a pen are all that are needed to get started. Divide the paper into four boxes with the titles of Strengths, Weaknesses, Opportunities, and Threats in a separate box. Then start listing ideas under each topic.
A SWOT analysis is a living, breathing document. It should be reviewed on a regular basis because nothing remains the same in the business world. There’s always something new to add or subtract from a SWOT analysis. If done right, this document sets the tone for future success and help a business SWOT your way to the top!
