Running a business is all about making the right decisions at the right times. Making choices about your products or services off the cuff and without appropriate planning and preparation could send you off down the wrong path. It is critical that every decision you make for your business is well-informed, and a SWOT analysis could be the answer you’ve been looking for.
A SWOT analysis can help you dig deep into consumer feedback, understand your competitive advantage and develop new products. The insights that can be revealed from a SWOT analysis can be used to strategically develop your business, as opposed to wasting efforts on trial and error solutions.
What is a SWOT analysis?
It might feel like heading back to business school when you start thinking about these handy little tables, but there is a good reason that SWOT analyses were the holy grail of decision making during education. SWOT stands for Strengths, Weaknesses, Opportunities and Threats, and they work by breaking down your business strategy and comparing internal and external factors.
The strengths and weaknesses are the internal parts of your business; these are the parts that you have the power to change, such as staff or assets. Opportunities and threats highlight the external factors that impact your business, such as competitors and consumer trends. Broken down into four quadrants, a SWOT analysis organises all of these factors into an easy to understand table. It provides an accurate snapshot of what your business is currently succeeding at and areas where you could improve.
How can a SWOT analysis help business success?
In order to operate a successful company, you need to make sure that every decision you make makes commercial sense. A SWOT analysis can provide you with a detailed overview of either a specific area of your business or the entire business as a whole. Every time you are dealing with a difficult issue or are unsure of where your strategy should be taking you next, a SWOT analysis can reveal details to help you formulate an actionable plan.
Identifying the strengths of your business can help you highlight your advantage over competitors. This will leave you with a list of factors that work in your favour, and from here, you can begin to enhance these even further. For business success, you should be able to identify your strengths and recognise why they are strengths and how they can help you in the future.
Many business owners tend to shy away from the weaknesses within the organisation. However, being aware of them and taking action on how to lessen the risk they bring can help you with your business success. A SWOT analysis forces you to address these weaknesses and come up with a plan to solve them.
Opportunities are the real source of success for a business, as they are the areas where you can expand on your strengths or reduce the impact of weaknesses. Looking at the external opportunities of your business can highlight easy wins, as well as significant chances for success. An external opportunity could be a local competitor closing down or an upcoming event in the area; no matter what the opportunity is, it is crucial you make the most of it.
Lastly, a SWOT analysis forces you to plan for threats to your business. External threats can hinder your success, and minimising the risk of them is essential. These could be threats from competitors, the economy or even new technologies taking the world by storm. By having these threats on your radar, you can appropriately plan and prepare your business.