If you're developing a project plan or looking to expand your business, it's important to do a SWOT analysis. The acronym is a term that stands for "strengths, weaknesses, opportunities and threats," and this written analysis helps you get a clearer picture of paths and obstacles your company may face.
A SWOT analysis is a great way to break down the key issues involved with creating or growing a business. It includes a strategic competitor analysis so you can understand the business landscape in a structured way. Take a closer look at SWOT components below.
When considering your organization's strengths, think about what your company does better than any other. Think about its advantages, whether it's your staff offering something no other company offers, agility to move quickly on a project, a superior knowledge base or something else.
Consider why a client or customer would choose your company or products over another company's - what makes your offerings unique? The answer can give you something to build on. A SWOT analysis example of this is a statement like, "Our company is first to market with a product developed by a team with unique expertise."
It’s also imperative to analyze your company's weaknesses, which some organizations prefer to call challenges. What areas of your business can you improve? Is there a process or financial issue that needs additional focus? Look at your business from your customers' point of view. Perhaps they see your product as more expensive than the competition. Or maybe you don’t have the market saturation, so your products aren’t available in as many places.
Maybe you need to improve customer service or upgrade your salesforce. Think about why you lose sales to rivals. That can give good insight into your weaknesses. A SWOT example of weakness is, "Our products are only known in the tristate area, and to grow, we need recognition and placement in the rest of the region."
This component of SWOT focuses on finding opportunities for your company. Your examples could include trends to follow or new markets for existing products. Opportunities may result from legislative or policy changes or newly introduced technologies.
By staying on top of industry changes, what's happening in the news and in society, companies can use these as opportunities to grow. It's a matter of figuring out the best way. A SWOT analysis example of opportunities is, "The government will be loosening regulations in X area, and as a result, more customers will need our services or products."
Just as changes in society and policies can positively affect your business, they can also introduce threats. These threats can be domestic or come from abroad. For example, new local regulations may make it more expensive to operate your business, or a foreign competitor may have decided to enter the U.S. market.
Threats can also include decisions by banks to renew a loan but at less favorable terms to you, changes to the tax code or technology that may render your software systems out of date. It’s important to identify threats early on so that your business can move nimbly. A SWOT analysis example of a threat is, "Manufacturers abroad are now making similar products at lower prices."
After performing a SWOT analysis with your team, you can also ask key customers or trusted advisors for feedback. Learn what they think of your company. You might be surprised that outsiders have different things to share than what you've determined internally.
When to use a SWOT analysis
Keep your goals in mind when performing a SWOT analysis. Here are some reasons when a SWOT may be particularly useful. You might be:
- Rolling out a new product, service or policy
- Determining a service's or product’s future direction
- Improving business operations
- Looking to better understand the company's barriers to achieving current or future goals
- Teambuilding to share the goals of different departments and internal stakeholders
The strategic analysis
Once you've completed a SWOT, it's time to prioritize what you need to do. Perhaps a growth opportunity should take precedence over possible threats. Or maybe you need to shore up a weakness before it becomes more pressing. Make your decision and push forward, delegating different tasks to the appropriate employees or teams.
You may need to reallocate financial or physical resources, too. Monitoring the results is important. If leadership or teams set goals for what to accomplish on each item, including a completion date, that'll help focus the efforts and provide accountability.
A SWOT analysis can relate to a service, product and even operational and workforce issues. It should be a collaborative exercise in which multiple individuals provide input. Risk is another issue that companies need to address, and that includes business insurance coverage. Contact Nationwide for more information.