Find your niche. Make your own opportunities. Be like your competitors. Strive for better. Make improvements. Perhaps you've heard one of these phrases? What do they have in common? Well, they're actually phrases that you can apply to your business by doing a SWOT Analysis.
A SWOT Analysis looks at your company's Strengths, Weaknesses, Opportunities, and Threats. It can be something that you do in a detailed manner or something that you could do looking at your business from a very generalized perspective. Read on to learn more about doing your own SWOT Analysis and how to apply it to your business.
Below I'm going to break down the components of a SWOT Analysis in a little more detail and provide some examples of what to look for or consider when putting the SWOT together. While you can do a lot of the analysis yourself, it's always helpful to ask others for their opinions and to seek information from outside resources.
When doing your SWOT Analysis, you'll need to think critically about your company's strengths. What do you do better than others? What advantages do you have? Maybe you have patents no one else has. Maybe you have a forward thinking leadership team. Maybe you have lots of funding for your business. Think about your competition and identify things that set you apart.
For example, look at Apple. They put such a focus on the experience and the design of their products that they are very deliberate in what they do. Its competitors may churn out imitation devices or tout them as being the next big thing, but they don't have the precision or attention to detail Apple prides itself on.
Continuing to think about your business for a SWOT Analysis, what are your weaknesses? What are areas that your competitors can exploit or take advantage of that might leave you in an awkward position? Maybe you have trouble with inventory management. Maybe cash flow is an issue with your business. Maybe you're expensive or your have poor customer service. Weaknesses can be opportunities for your competitors but you can also transform them into opportunities for your business.
Example time again. Let's once again look at Apple and their business. Apple has the ability to be nimble, but they are very deliberate in their product design and development. Its competitors manage to produce products twice as fast as Apple seems to do. While this may be perceived as a weakness, they're able to spin it into being a strength. Most businesses aren't that fortunate.
Opportunities can come from weaknesses in your competitors, your customer base, or from within your own organization. Opportunities are areas your business has the chance of excelling in. Maybe you've found an untapped niche that needs to be serviced. Maybe you've built a better mousetrap. Maybe you've streamlined a fulfillment process that allows you to get the upper hand on your competition. Perhaps you have identified an awesome target demographic for your products or services or an emerging market.
Opportunities are ripe for the taking if you know where to look.
Let's take a look at the airline industry. Virtually all of the major airlines are charging fees for checked bags. Southwest Airlines and JetBlue are the only two airlines that have some sort of “free checked bag” policy. This is an opportunity for them to take business from the legacy carriers who charge fees.
Threats are things that can be damaging to your business. They can be exploited weaknesses or up and coming competitors. They can be opportunities your competition has capitalized on first. They can be computer viruses that threaten your infrastructure. While it's impossible to predict and prepare for all threats, it's important to do your best to minimize the risk your business faces. Maybe your business is being bogged down by regulations, policies, or taxes. Maybe a competitor moved in down the street and is undercutting your prices or you haven't updated your server software in ages.
For many years, Southwest Airlines had contracts that guaranteed the price they paid for jet fuel. Consequently, when oil prices exploded they didn't have to raise fares to offset the added expense. Their competitors on the other hand weren't so fortunate. Obviously, Southwest Airlines posed (and still does) a threat to the other airlines because they could undercut their fares by a significant margin on the same routes.
Acting Upon Your SWOT
Once you've put your SWOT analysis together, you should be able to get a good idea of where your business is positioned in the marketplace. Having identified your strengths, weaknesses, opportunities, and threats, you should be well-prepared to put together a business (and /or marketing) plan to further your business. The SWOT gives you a snapshot of what's working and what isn't in your organization and will help you develop tactics to improve what you do.
As an added tip, you can also conduct a SWOT Analysis on your competitors. Seriously. While you may not be able to get access to all of their sensitive data, you can certainly research and uncover things about their business that you could potentially leverage to your benefit.
What say you? Have you done a SWOT on your business? Did you discover anything telling?