I’m guessing you have heard of the SWOT analysis where you identify the Strengths, Weaknesses, Opportunities and Threats of your business.
I wrote an article on how you can conduct a SWOT analysis and use it to improve your business, but this week I wanted to really help you to dive deep into your business and conduct a multi-level SWOT analysis on your business.
First, let me explain for the uninitiated.
A SWOT analysis is a critical tool to analyse where your business currently stands in various performance areas. It is used as a key stage during the business planning process.
Strengths and weaknesses are internal characteristics, within your control to develop or eliminate. Opportunities and threats are external influences like the economy, legislation or natural disaster which you cannot control but can to manage their effects.
An analysis of the strengths, weaknesses, opportunities and threats of your business will help you to identify strategies to improve on strengths and take advantage of opportunities, as well as eliminate weaknesses and mitigate against threats, and thus improve your business performance.
However, did you know that you can use the SWOT analysis to dive deep into every part of your business and develop immediate tactics as well as longer-term strategies to correct weak areas and build up strong ones?
If you have heard of the SWOT analysis you will probably have heard of it, or used it, in the context of conducting a SWOT analysis of your whole business.
You ask yourself “What are the strengths of my business, what are its weaknesses?”
You also ask yourself, “what’s on the horizon politically, in economics, within social trends, legislatively, technologically, that could have an effect on my business – which of these may be a threat and which an opportunity?”
This is a useful exercise because it will give you a good understanding of where you are now across the business – and therefore what to do to improve and grow the way you intend.
However, you can dive into specific areas of your business to conduct a focused SWOT analysis on each of those areas.
For example, you can conduct a SWOT analysis on:
- Each product
- Your customers
- Sales and delivery
- Customer Service
- Systems and procedures
- Your finances
- Your administration
- Your physical resources (premises, equipment)
- And so on.
You can choose particular areas of your business that are a concern to you right now, conduct a SWOT analysis, and then create detailed and immediate action plans to fix that area.
For example, let’s say that you are concerned that your poor customer service may be losing you sales. You’re not quite sure why but you have a feeling that you’re not on top of the game there and customers don’t seem to become raving fans and some are not coming back.
You can set a day aside and organise a meeting with your sales team as well as your fulfilment and delivery teams.
In the meeting, you brainstorm the strengths, weaknesses, opportunities and threats of your customer service. Let’s say that what comes out are these issues:
- You have a strong sales team that can close leads – a strength
- Your system transferring responsibility from sales to fulfilment and delivery is poor, based on verbal notices – a weakness
- Your delivery efficiency depends on one person who really knows their work but who can be swamped when busy – both a strength and a weakness
Once you know and can analyse these strengths and weaknesses you may be able to come up with action plans to:
- Implement an automated sales-to-fulfilment system
- Use some of your sales team to provide customer service follow-through
- Implement a training program where the delivery expert trains others
- Create a “status” board that shows the stage an order is going through.
However, if you are conducting detailed SWOT analyses as part of a business planning process, so that you can identify the more strategic issues that you need to fix (and in the case of potential external influences, prepare for) you should be more systematic.
You should certainly conduct a business-wide SWOT analysis. This gives you a clear understanding of overall issues and possibly indicate where some of the problems may be deeper-rooted.
You should then conduct a SWOT analysis of the following key areas of your business:
- Your products
- Customers and Marketing
- Production and Delivery
- Human Resources
- Operations and Administration
You can group sub-groups of concern under the main headings.
For example, in the SWOT analysis of Production and Delivery, you may include suppliers and costs, production equipment, and so on.
These discussions do not need to involve all the people connected to each area like you did to identify and fix the immediate problems. Since the context of these SWOT analyses is to provide more strategic level issues that will take longer to fix, they should be attended by people who know more about the overall business, with one or two “specialist area staff” when necessary.
In these discussions focus on one issue at a time, and in it, focus on its strengths, weaknesses, opportunities, then threats, one at a time. Do not move on to weaknesses until you think you have identified all the strengths, and so on, and then once you have finally identified all the strengths, weaknesses, opportunities and threats in turn, then move on to the next issue or area of your business.
When you start to discuss opportunities and threats, be mindful that these are external influences causing the opportunities or threats.
Sometimes, people get confused and they call some weaknesses “threats” because it could threaten the business. In this context we are not looking at how internal factors could be used as advantages or threats – we are already going to deal with them as strengths and weaknesses – we are trying to identify real and often unpredictable external influences.
A good way to keep the focus on this is to look at opportunities and threats arising from anything:
For example are there any effects to your business if the government changes, or if there are social trends about the use of your product or changes in technology?
Once you have identified potential external influences, then you can decide if they form an opportunity or a threat (or sometimes both!).
Another tip is to keep asking yourself “what do I mean by…”
It is easy to call out an issue like “our human resources is a strength” or “those new laws will be a threat” but you need to know exactly what you mean.
So, are human resources a strength because your people are skilled? Or is it because they work hard?
Those two characteristics are very different strengths and you don’t want to implement the wrong strategy because you were loose in defining the issue.
When you have completed identifying all your strengths, weaknesses, opportunities and threats you need to prioritise them.
Like all small businesses, you will have scarce resources. Even if you are planning 12 months ahead, you can only do so much in your time on top of day-to-day work. So you need to prioritise and identify the high-impact concerns to work on.
To do this, go through each strength, weakness, opportunity and threat, and ask:
- How does this/will this affect my business?
- On a scale of 1 to 10 where 1 is negligible and 10 is high impact, how could this affect attaining my vision?
- On a scale of 1 to 10 where 1 is low and 10 is high, how likely is this to affect my business?
Using this analysis you can then rank the most important, high-impact issues to work on.
You can download our free High Impact Issues worksheet to help you do this.
When you work on your high-impact issues you can create strategies to:
- use strengths to further improve the area
- eliminate weaknesses and therefore disadvantages
- make plans to take advantage of opportunities if they occur
- make plans to protect against threats should they occur
Knowing how you stand in your business and in the specific areas of your business, you can compare this position with your “ideal” state where you want to be.
This will identify the gaps that you need to bridge in order to improve and grow your business into the “ideal” state. In turn, this will help you write strategies and key goals. Using this important tool, you can continuously improve all the areas of your business.
If you want to understand how this analysis can help you plan for the future, get our free Business Planning Guide and Checklist here.
Next week, I’m going to write about “Bridging the Gap” so make sure you’re able to get that article by signing up here (we do not spam!) to get all the valuable tips, tricks and traps in growing your business, your way.