SWOT analysis – it sounds pretty technical, doesn't it? Or at least that's how it might seem if you've never heard of a SWOT analysis before or have only heard the term in passing. The list of business acronyms seems to grow longer by the day, but SWOT is one worth committing to memory. So let's break it down, shall we?
What does SWOT stand for?
SWOT is an abbreviation for:
STRENGTHS: What your business does well and the value it provides – e.g., competitive price points, a skilled staff, strong customer centricity
WEAKNESSES: Areas where the business could improve – e.g., a lack of strong leadership, operational limitations, no unique selling proposition
OPPORTUNITIES: Potential avenues where the company could succeed – e.g., emerging needs across your market, a lack of innovation in your industry
THREATS: Challenges that could harm the company's success – e.g., rising supply chain costs, new competitors entering the market, negative customer reviews
What's a SWOT analysis?
Now that we've covered what SWOT means, we'll go over the SWOT analysis. At its core, it's a tool to help you identify your company's strengths and weaknesses as well as current opportunities and the threats it's facing. You can utilize a SWOT analysis for an overview of the business or conduct it at a micro-level. It's great for projects or evaluating departments/teams within the company. The analysis provides you with a deeper understanding of your business so you can develop a more effective operating strategy and make well-informed decisions moving forward. It empowers you to create a better roadmap for the team to follow that accounts for contingencies and pinpoints potential areas of growth, all so you can drive your business to more success.
Why does my business need a SWOT analysis?
Any organization or team can benefit from a SWOT analysis. It doesn't matter what industry you're in, whether you're a newer operation or have been in business for years, or how big (or small) your team may be. The vast majority of organizations today are competing in highly competitive environments. It's essential to have a strong pulse on the competition and the overall market conditions. You also need to know what's working and what isn't within the business. Your company's viability hinges on a solid strategy and execution plan for long-term success, and a well-researched SWOT analysis makes that possible.
When's the best time to create a strategy for my organization?
There's no time like the present! Especially since it's so important for your strategy to be timely. Each of the four pillars of SWOT can change at any given moment – even more so in today's economy with the challenges of the pandemic, inflation, and supply chain breakdowns. What may have been a strength or growth opportunity last year may not be relevant today. Weaknesses can change and new threats can pop up just as quickly as they can dissipate. The best practice is to conduct an overall company-wide SWOT analysis at least once a year. But don't let that limit you because you can do an analysis whenever and as often as needed. You might find it helpful to do these analyses throughout the year for projects, campaigns, product launches, etc.
A strategy should be dynamic while also flexible enough to account for changes in the market conditions and the competitive landscape. However, the overarching direction should remain the same. There isn't a one-size-fits-all approach to creating a strategy; all that matters is that it works for your business. It should be as structured or adaptable as you and other stakeholders need it to be.
How to conduct a SWOT analysis
The best, most effective SWOT analyses have input from a variety of viewpoints. It helps paint a fuller picture of the business and yield more objective results. Work with people from different company perspectives – people from diverse departments, seniority levels, responsibilities, etc. It all depends on the level you're analyzing. If you're looking at a macro-level, you'll likely want all departments represented. For a team- or project-level analysis, you may only need to collaborate with the relevant groups.
Once you've identified the right people to meet with, it's time to brainstorm. Give yourselves enough time because a SWOT analysis isn't something you want to rush. It might not be enough to have just one brainstorming session. Most likely, you'll need a few conversations to hash out all the details. Start by going through each letter of SWOT. These are some good questions to ask to get the conversation going:
What do our customers like about us?
What internal resources do we have?
What's our most common positive feedback? What's our most common negative feedback?
What do we do that frustrates our clients?
What skill(s) do we lack?
How does the public perceive our company?
Who are our competitors?
What advantages do we have over our competitors? What advantages do they have over us?
What's changing in our industry?
How does the current political/economic/social climate affect our business/industry/customers?
Here is what a SWOT Analysis may look like once you have identified a few items per category.
I've completed my analysis – what's next?
After you've finished the analysis, you can start planning your strategy for each of the four SWOT components. Start with S and think about how you can continue to hone and harness your strengths. Next, look at your weaknesses and plan how to improve in these areas. For opportunities, you can compare them to your strengths. How can you leverage your competitive edge to seize these opportunities and take full advantage of them? And lastly, plan how you can prepare to mitigate or neutralize the threats you've identified.
In conclusion – are SWOT analyses worth it?
Yes, because they empower you to run your business better. You'll be able to focus on showcasing and nurturing your strengths and be aware of the areas in which you're underperforming. You're more likely to successfully capitalize on an opportunity when you anticipate it and are ready to strike while the iron is hot. If you're proactive, you have a better chance of lessening the impact of a threat – or eliminating it altogether. Trust us; SWOT isn't another buzzword that we'll all forget about in a few years. A SWOT analysis is the first step to creating a robust, well-defined strategy that helps you thrive in today's competitive marketplace.
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