To Easily Identify The Strengths, Weaknesses, Opportunities and Threats Facing Your Life and Business.
Briefly, SWOT stands for a simple method that can be used in a number of ways including; evaluating the alignment of your business, evaluating a job or an opportunity and even doing a self analysis. For the purpose of this Post, we’ll focus on SWOT as applied to analyzing a small business’s health.
What makes SWOT particularly powerful is that, with a little thought, it can help you identify opportunities that you may want to exploit, and uncover weaknesses that you may have been unaware of or blind to.
Perhaps more importantly, by looking at our own business through the SWOT lens, we can start to craft a strategy that helps us compete more successfully and profitably in our chosen market.
How To Use The SWOT Tool
Originated by Albert S. Humphrey in the 1960s, and used extensively since, SWOT can be used to take a cursory view of your business’s health or if you choose, can be used as a serious strategy tool. Used in a group setting, it gives participants the opportunity to become stakeholders in the decision making. Great for building ownership and buy-in.
Strengths, Weaknesses, Opportunities, Threats
Strengths and weaknesses are often internal to your organization, while opportunities and threats generally relate to external factors. Below, under each of the four points are the types of questions you need to be asking in each area. Be honest with your response. After all, it’s your business’s health you’re assessing.
Evaluating Your Strengths
- What advantages does your company or product have in your industry or market area?
- What do you bring to the table or do better than anyone else?
- What unique or lowest-cost resources can you draw upon that others can’t?
- What do others in your market see as your strengths?
- What factors have gotten you “the sale”?
- What is your organization’s Unique Selling Proposition, what makes your product or company unique?
- Why do customer buy what you have?
Note: Consider your strengths from both an internal and external perspective, meaning from your customers and competitors point of view. For example, if all of your competitors provide high quality products, then a high quality production process is not a strength in your organization’s market, it’s a necessity.
Bringing Your Weaknesses To Light
- What could you improve?
- What should you avoid?
- Where do you have fewer resources than others?
- What are others in your market likely to see as your weaknesses?
- What factors have lost you sales?
- Are there quality or cost factors that need to be considered?
Again, consider this from an internal and external perspective: Do other people seem to perceive weaknesses that you don’t see? Are your competitors doing any better than you?
It’s best to be realistic about this and face any unpleasant truths rather than shoving them under the carpet. Get the weaknesses out in the open and deal with them!
What Opportunities Are Ahead of You?
- What good and new opportunities can you spot?
- What interesting trends are you aware of?
- Are there changes in technology and markets on both a broad and narrow scale that may impact you?
- Are there changes in government policy related to your field that could open opportunities?
- Have social patterns, population profiles, lifestyle changes, and so on opened new opportunities?
- Has anything changed in your local environment that may open new doors?
A useful approach when looking at opportunities is to look at your strengths and ask yourself whether these open up any opportunities. Alternatively, look at your weaknesses and ask yourself whether you could open up opportunities by eliminating them.
What Are The Potential Threats Facing Your Business?
- What obstacles or threats do you or your business face?
- What are your competitors doing that is or may impact you?
- Are quality standards or specifications for your products or services changing?
- Is changing technology threatening your position or ability to grow?
- Do you have bad debt or cash-flow problems?
- Could any of your weaknesses seriously threaten your business?
When looking at opportunities and threats, don’t overlook external factors, such as new government regulations, or technological changes in your industry.
Further SWOT Tips
If you’re using SWOT as a serious tool (rather than as a casual “warm up” for strategy formulation), make sure you’re rigorous in the way you apply it:
- Only accept precise, verifiable statements (“Cost advantage of $10/per unit in sourcing product x”, rather than “Good value for the money”).
- Ruthlessly prune long lists of factors and prioritize, so that you spend your time thinking about the most significant factors.
- Make sure that the generated options are carried through and applied.
- Apply it at the right level – for example, you might need to apply the tool at a product or product-line level, rather than at the much vaguer whole company level.
- Use it in conjunction with other strategy tools (such as you may find on resources such as MindTools.com).
Key Points
SWOT Analysis is a simple but useful framework for analyzing your organization’s strengths and weaknesses, the opportunities and threats that you face. It helps you focus on your strengths, minimize threats, and take the greatest possible advantage of opportunities available to you.
It can be used to “kick off” strategy formulation, or in a more sophisticated way as a serious strategy tool. You can also use it to get an understanding of your competitors, which can give you the insights you need to craft a coherent and successful competitive position.
About the author: Andre Kasberger is an entrepreneur, on-line marketing strategist and dot connector, who enjoys helping individuals and business owners achieve their goals.
This article is the culmination of my personal experiences working through many bumps on my journey, intense study of the subject and input from various experts. Look up or e-mail Andre at: www.AndreKasberger.com, andre@bestyouyet.com
Note: The format of this Post is an adaptation of an article published by Mind Tools on the same topic. Mind Tools is an excellent source of similar business tool kits.
