We are a better company than our biggest competitor. I’ve heard, you may have said it, it’s often a bad statement. It might be true. The problem with this statement is that even if the product is technically better, there are often other factors that contribute to why the bigger business performs better and is bigger. In many cases, someone stating that they are better is a misperception on either the businesses weakness or strengths of business unless it is true. Making a SWOT analysis can help you understand your business and the outside forces that can impact it.
What is a SWOT Analysis
A SWOT analysis is a review of a business in four categories: strengths, weaknesses, opportunities, and threats. The acronym covers internal forces that are positive and negative, followed by external forces that are positive and negative. The idea is to be aware of your business and where it lies within the industry. Let’s cover each section.
S – Strengths
Strengths are elements within a business that are favorable. A company that has a lot of customers, extra cash, specific expertise, personnel, patents, processes, distribution, or trademarks is part of the strengths category. Think of this as assets that make your company great. Knowing these can help you recognize some of the benefits of your specific business. If you ever been asked why someone should work with you, run this part of the exercise and you this may help you understand why someone should buy from you.
W – Weakness
Understanding your business weaknesses is important in your business development. Reviewing your business’ weaknesses will help you to understand your business in areas you need to avoid or possibly improve those core competencies. I worked with someone who desperately wanted a new business. In an attempt to start the new business, he partnered with someone and then began making promises without any expertise within that business. Neither person was willing to do that work, and the team had a void of knowledge in that area. It was a serious issue. The best thing is to recognize weakness and either avoid those specific areas of the business or plan to tackle those issues with obtaining the resources to answer them.
O – Opportunities
Opportunities are anything that relates to your business that is either external or internal and may have an impact positively to your business. Examples of opportunities might be a new product line that has launched with a patent or perhaps research that places your product or service in a positive light. A new sales team is assembling that will increase your overall income. Perhaps there is a new targeted audience that you can focus on sales more efficeintly resulting in increased revenue. This may even be a competitor has been placed in a negative light which could help send new customers your way. Whatever opportunities you recognize to make sure it is something you would like to go after.
T – Threats
Threats are real issues to businesses that assessing them can help your company succeed should you face them. Examples of this might be losing key staff, changes in laws, economic downturns, lawsuits, you name it can have a real threat to the business. Discovering these issues can help you prepare to overcome them. If a key staff member dies, perhaps life insurance to overcome any attrition. Perhaps in a recession, you plan to have a new line of products for price conscience costumers. A price war could have devastating consequences, and having a strategy to diffuse would be profitable. Determine what threats you may face and find ways to strengthen your business against it.
Do You Need A SWOT Analysis
The answer is maybe. Not every business is necessarily in need of analysis. Where it might matter is whether you are looking at starting a business and you aren’t sure if you can enter it. Perhaps there are some problems with the company you run, and this may be the analysis to identify if external forces are the cause. You might want to figure a better selling proposition and understanding your strengths and weaknesses will help you get there.
Conclusion
Creating a SWOT analysis for your business is important in planning for success. A look at these four areas (strengths, weakness, opportunities, threats) can help your business understand its position in the industry.