Strengths, Weaknesses, Opportunities, and Threats. That’s what is in a SWOT analysis but what exactly is it? It is basically an informal audit of your company so you can properly evaluate if you are working to the best of your company’s ability. A SWOT analysis allows you to plan ahead and identify areas that can change so your business can grow.
It isn’t just for big businesses either. It can help any size business become more efficient and scale to new heights. You can hire an auditor to do those evaluations, or you can even do it yourself with the help of your team in your office.
Using software like a timesheet app to understand if you are efficient with your human resources, or logistics software to determine if your supply chain is efficient is part of a SWOT analysis. In this article, we will go over exactly what a SWOT analysis entails and how to implement it in your office.
Elements of a SWOT analysis
There are two basic factors relating to a SWOT analysis that goes beyond just the strengths, weaknesses, opportunities and threats. These are categorized as internal and external.
Internal
- Strengths – The strengths of your business are the resources available to do business. Those resources could be your employees that are doing the work to generate revenue. They can be the revenue that the company makes. And then other physical resources like the value of the land where the building is located or other assets the company has.
- Weaknesses – Also internal are the negative aspects of your business that are keeping growth limited or otherwise hindering your ability to do business. The weaknesses could range from poor efficiency, bad supply chain management with physical products or the costs of doing business among others.
External
- Opportunities – These are the aspects of business that present themselves from an outward position. They are out of your control, but there for you to take advantage as long as you are positioned to do so. This can relate to your strengths, as well. If you are positioned to take advantage of opportunities then that obviously helps you.
- Threats – Another external factor are the threats facing your company. They are usually also out of your control. It can be a recession, a trade war or even a natural disaster. How you are able to weather these externalities is also dependent on your strengths.
Steps of SWOT analysis
The first step is to identify the strengths. Have a meeting and ask what sets your business apart from your competition. Other questions like how your pricing is compared to the competition and what the profit margins are are other good types of questions. Follow this line of questions and make note of all the strengths you think your company already has.
The next step is to identify weaknesses. This one can be slightly uncomfortable. You may want to use data when trying to identify these problems. Metrics like errors in your shipping, inefficiencies in your processes, or customer dissatisfaction coming up in surveys should all be used to make this determination.
Next up is opportunity. What things are happening that your company is positioned to take advantage of? Is there a new technology that can help your business solve some of the weaknesses? Or maybe there is a booming economy with consumers having extra spending money that might be looking for your product or service.
Lastly, the threats facing your business should be evaluated. There may be new laws on the books that affect your ability to do business. Are your strengths enough to help you through that period?
Take action
Without this analysis, there is not much planning you can do to make sure your business is going to be able to grow or even weather some down times economically. If your strength is that you have lots of cash at your disposal and your competitors are facing a cash crunch, then take advantage and buy up your competition. Take advantage of a new technology that you implemented before the competition that gives you an advantage.
There will be threats to your business as that is a normal aspect that can’t be changed. But by strengthening your assets and minimizing your weaknesses, you can also minimize the threats facing your business. Without this analysis, then doing business as usual might have you chasing your tail into oblivion.
Make sure to include all the members of your team to contribute to the SWOT analysis no matter what their role is with the company. With everybody taking part in finding solutions to your business problems, you are more likely to find some creative ideas.
