Introduction
This is part of a series of in depth articles regarding Strategic Planning tools and frameworks. Our goal is to provide our clients with useful resources to use in their business. Should you ever feel overwhelmed or need some help with the details, we are happy to discuss how we can help you grow and thrive! Just click here to set up a meeting! You can also email us or give us a call. We are often with clients during the day, but strive to respond within 24 hours.
Ok, let’s get into it!
In this article we will discuss the following:
- What is a SWOT Analysis
- Before you Start – Defining and Objective
- Strengths
- Weaknesses
- Opportunities
- Threats
- Summary
What is a SWOT Analysis?
A SWOT analysis is a strategic planning tool that businesses can use to assess their internal and external environments from a strategic perspective. It involves identifying the Strengths, Weaknesses, Opportunities, and Threats facing a business as a thought and brainstorming tool in order to help drive strategic planning decisions.
This analysis framework, leads businesses through a thought process to help identify the key internal characteristics and external forces that may affect their success. By utilizing this information wisely in the strategic planning process, business leaders can create a strategy that leverages strengths, addresses weaknesses, takes advantage of opportunities, and mitigates threats beforehand to optimize their likelihood of success.
Like any other framework that we discuss, this analysis will only be as good as the careful thought and input that is put into it. Take your time and consider all angles, it can have a profound effect on the direction of your planning and will help drive your efforts in a measured manner.
Ok, we think you get it.. So how does it work… ?? Let’s walk through it step by step!
Before you Start
Define your objective
Identify the reason for conducting a SWOT analysis and what you hope to achieve from it. This will help guide the analysis and ensure that it is relevant to the business’s goals. Identify the scope of the analysis, it is not always executed for the business as a whole… it can be for a specific division, product line or service, or any other strategic planning activity. So, make sure you scope the analysis to identify what should be included, and sometimes more importantly, what should not.
Strengths
Properly identifying a business’s strengths is an incredibly important step in conducting a SWOT analysis and developing a business’s strategy. It is these strengths that you will leverage in your strategic planning, marketing strategy and brand identity to compete for market share and stand out to your prospective clients. It should be taken very seriously and with careful thought and reflection.
A business’s strengths are internal factors that give a business a competitive advantage over others in the industry. They can be tangible assets, such as patents, trademarks, or proprietary technology, level of quality, or intangible assets, such as a strong brand reputation, talented employees, or efficient processes.
Identifying your Business’s Strengths
To identify a business’s strengths, you should gather information from various sources, such as customer feedback, employee surveys, financial statements, and industry reports. It is important to consider both qualitative and quantitative data to get a comprehensive understanding of the business’s strengths.
Techniques to help
We know all of this can be a little daunting, so we are providing you with a few tools and techniques to help guide you through the process. No tool is a fit for every analysis and you don’t need to use every technique identified. We believe that these recommendations will help you assess your strengths holistically and can identity additional characteristics that you might not have otherwise thought about.
Here are a few techniques that can be used to identify a business’s strengths include:
SWOT Analysis Workshop
You may want to conduct a SWOT analysis workshop: Bring together key stakeholders in the business, such as executives, managers, and employees, to identify the business’s strengths. This workshop can be done through brainstorming sessions, group discussions, or surveys, but the key here is that you are open to all input. Every position and person in your business has a unique viewpoint and unique experiences.
Customer Feedback
Gather feedback from customers through surveys, reviews, or social media. Look for patterns in the feedback that indicate what your business is doing well (as well as where you may need to improve.. We will log those in the next step).
Financial Statements, Sales Reports, etc.
Analyzing financial statements: Review the business’s financial statements, such as balance sheets, income statements, and cash flow statements. Look for areas where the business is generating revenue, has low expenses, or has a strong financial position.
Internal Audit
Conducting an internal audit: Take a look at your business’s internal operations, such as its processes, systems, and culture. Look for areas where the business excels, such as efficient production processes, a strong safety record, or high employee satisfaction.
Viewing against the Competitive Landscape
Review your direct and indirect competitors. What areas do you outperform your competition? Categorize the traits of recent wins and why you believe you were selected. Sometimes having a backdrop to measure against can provide the needed insights.
Good Practice
A good practice is to log each possible strength identified throughout this process and then review in a smaller group or as a team to boil this list down to the top 3-5 strengths that you can best leverage in your strategic planning and log them for your analysis.
Strengths Summary
Once you have identified the business’s strengths, it is important to analyze them to determine how they can be leveraged to achieve the business’s goals. This could involve developing strategies to increase market share, expand into new markets, or improve customer retention. By identifying and leveraging its strengths, a business can gain a competitive advantage over others in the industry and achieve its objectives.
Weaknesses
Identifying weaknesses is another critical step in conducting a SWOT analysis. While it may not be as pleasant as identifying strengths, it is equally important to recognize areas where your business may be at a disadvantage. By acknowledging these weaknesses, you can work to minimize their impact and develop strategies to overcome them.
A business’s weaknesses are internal factors that put the business at a disadvantage compared to others in the industry. They can be tangible or intangible factors that hinder the business’s ability to compete, such as outdated technology, a lack of skilled employees, or poor financial management.
Identifying your Business’s Weaknesses
To identify a business’s weaknesses, you should gather information from various sources, such as customer feedback, employee surveys, financial statements, and industry reports. It is important to consider both qualitative and quantitative data to get a comprehensive understanding of the business’s weaknesses. Qualitative data is descriptive and subjective, while quantitative data is numerical and objective.
Techniques to help
Much of the same techniques for strengths can help with weaknesses, you can and will find weaknesses in your search for strengths. There are two perspectives on this, combined analysis where you look for strengths and weaknesses simultaneously (you likely will notice them either way) or having dedicated sessions for strengths and weaknesses separately. We tend to like to either keep them separate or simply keep a “parking lot” list on a board for weaknesses while we focus on strengths.
Here is the main reason: We find that trying to focus on both simultaneously leads to more misdirection and tangents and one or the other suffers in terms of focus. Since they are both equally important for different reasons, we thought we would provide some experiential guidance, but you certainly can execute both in the same sessions and format if you prefer or are short on available time.
Some techniques that can be used to identify a business’s weaknesses include:
SWOT Analysis Workshop
Conducting a SWOT analysis workshop: Similar to identifying strengths, you can bring together key stakeholders in the business to identify the business’s weaknesses. This workshop can be done through brainstorming sessions, group discussions, or surveys. It’s important to encourage open and honest communication to get a complete picture of the business’s weaknesses.
Customer Feedback
Analyzing customer feedback: Pay attention to feedback from customers and identify patterns that indicate areas where your business may need to improve. This could include issues with customer service, product quality, or pricing.
Financial Statements, Sales Reports, etc.
Analyzing financial statements: Review the business’s financial statements to identify areas where the business may be struggling. This could include high expenses, low profits, or cash flow issues.
Internal Audit
Conducting an internal audit: Take a close look at the business’s internal operations, such as its processes, systems, and culture. Identify areas where the business may be falling short, such as inefficiencies, lack of employee training, or poor communication.
Viewing against the Competitive Landscape
Analyzing direct and indirect competitors: Look at your competition and identify areas where they are outperforming your business. Categorize the traits of recent losses and why you were not selected. Understanding why you lost can be a powerful tool in building a stronger future.
Good Practice
Similar to the Strengths guidance, good practice is to log each possible weakness identified throughout this process and then review in a smaller group or as a team to prioritize the top 3-5 weaknesses that need the most attention.
Weaknesses Summary
Once you have identified the business’s weaknesses, it is important to develop strategies to overcome them. This could involve improving processes, hiring more skilled employees, or implementing new technology. By acknowledging and addressing its weaknesses, a business can become more competitive and achieve its objectives.
A Note for Strength and Weaknesses
It’s important to note, and to remember, that your business will always have both strengths and weaknesses! Your goal should be to add to or reinforce your strengths and minimize the severity and impact of your weaknesses. As you eliminate weaknesses, focus on the next in line and ensure your planning addresses that as well.
Opportunities
Opportunities are essential elements that can help a business achieve its objectives by identifying external factors that can positively impact its performance. These factors could be the emergence of new markets, advancements in technology, or changes in consumer behavior.
Identifying Opportunities
The identification of opportunities is crucial for businesses that aim to expand their operations, increase their market share, or improve their profitability. By being proactive and vigilant in identifying opportunities, a business can stay ahead of its competitors and take advantage of favorable trends in the industry. Additionally, a focus on identifying opportunities can lead to a culture of innovation within the business, leading to your strategic planning fostering further growth and success.
Techniques to help
The following techniques can help you evaluate and prioritize these opportunities, and create actionable plans to take advantage of them. By utilizing these techniques, your business can stay ahead of the competition and maximize its potential for growth and success.
Analyze Market Trends
Conduct research on the market, industry, and consumer trends to identify emerging opportunities. This could include analyzing data on consumer preferences, shifts in technology, or changes in the regulatory environment.
Competitor Analysis
Conducting competitor analysis: Look at the strengths and weaknesses of competitors to identify areas where your business can outperform them. This could include analyzing their marketing strategies, product offerings, pricing, geographic location, operational capabilities.
Explore Untapped Markets
Look for untapped markets or unmet needs that your business can address. This could involve expanding into new geographic regions, offering new products or services, or targeting new customer segments.
Engaging with Customers
Seek feedback from customers on their needs, wants, and pain points. This could include conducting surveys, hosting focus groups, or monitoring social media conversations.
Industry Events
Attend industry events, conferences, and trade shows to stay up-to-date on the latest trends and developments. This could provide opportunities to network with peers, learn from experts, and identify potential business partnerships.
Good Practice
As before, you want to make sure that you are accepting all inputs on these studies. Generate a list of all potential opportunities that you can identify, feel free to put a star next to sure things, but this list is important!
Opportunities Summary
Once you have identified potential opportunities, it is important to evaluate and prioritize them based on their feasibility and potential impact on the business. By identifying and pursuing opportunities, businesses can grow, innovate, and stay competitive in their industry. Carefully vet each opportunity for its likelihood of success and impact before letting it drive your strategic planning. Select your top 3-5 and focus there first, but keep the list and review it regularly to add or eliminate other opportunities as the external environment shifts, or as your plan evolves.
Threats
Identifying threats is a critical component of conducting a SWOT analysis as it allows businesses to anticipate potential challenges and take proactive measures to mitigate them. Threats are external factors that can negatively impact a business’s performance or hinder its ability to achieve its goals. These threats can arise from various sources, such as changes in the market, emerging competitors, or shifts in consumer behavior.
This analysis, similar to opportunities should be an ongoing process, but for the SWOT analysis you are conducting, a snapshot of the present will help you inform your strategic planning process.
Identifying Threats
Threats to your business or your strategic planning should not be taken lightly. No market is static and you can’t see everything coming, but taking a careful look at the current landscape is incredibly important. These are the factors that may bolster your planning in the direction you have chosen to drive towards as it brings you closer to safety and mitigates risk, or they may inform you that you have chosen shark infested waters and you should carefully consider whether you want to move forward or find a new approach.
Techniques to help
There are a lot of ways to come at this section of the analysis. It is important that you attempt to be holistic in your approach, and take into account some of your current top Strengths that were identified earlier to ensure that the specific threat landscape for strategic paths identified will still allow you a high likelihood of success. If some of your core strengths are, say, high profile key employees, what threats exist that would eliminate those strengths? What is the risk that a competitor woos those employees into leaving, or if they have an onset of health issues? What can be done to minimize those risks? This is clearly just one example, but the key is to really think about how each of these core characteristics affect your planning and to ensure your planning addresses them to maximize your success!
Conduct a PESTLE Analysis
This involves analyzing the Political, Economic, Social, Technological, Legal and Environmental (PESTLE) factors that could impact the business’s operations. This analysis can help businesses identify potential threats that could arise from changes in government policies, economic downturns, cultural shifts, technological advancements, legal risks or environmental changes and events. This can be a big one in some industry verticals.. Look carefully!
Industry Trends
Businesses can also analyze industry trends and emerging patterns to identify potential threats. This could involve tracking changes in consumer behavior, market saturation, or emerging competitors. Mergers and acquisitions can lead to large capital behind your competing forces.
Monitor Competitors
Keeping a close eye on competitors can help businesses identify potential threats and adapt their strategies accordingly. This could involve monitoring competitors’ pricing strategies, product offerings, or marketing campaigns. If you chose an unsaturated market where your competitors aren’t yet playing from your opportunities list, you may want to plan for how you will react if your competitors follow suit.
Survey your Customers
Gathering feedback from customers can help businesses identify potential threats to their reputation and customer loyalty. This could involve identifying common complaints or areas where customers feel the business needs improvement.
Analyze your Supply Chain Risks
Finally, businesses can analyze their supply chain to identify potential threats that could impact their operations. This could involve identifying potential disruptions in the supply chain, such as supplier bankruptcies, changes in shipping regulations, or even pandemics (as we have unfortunately experienced recently).
Good Practice
As before, you want to make sure that you are accepting all inputs on these studies. Generate a list of all potential threats that you can identify, feel free to put a star next to sure things, but this list is important! Carefully vet each threat for its likelihood of occurrence and impact before letting it drive your strategic planning. Select your top 3-5 and focus there first, but keep the list and review it regularly to add or eliminate other threats as the external environment shifts, or as your plan evolves.
Threats Summary
Once potential threats have been identified, businesses can develop strategies to mitigate them. This could involve diversifying the business’s offerings, investing in new technology, or developing contingency plans to address potential disruptions. By anticipating and addressing potential threats, businesses can ensure their long-term success and resilience.
Summary
After conducting a SWOT analysis, it’s important to actually use the information gathered to inform your strategic planning. The next steps will depend on the specific results of your analysis.
If you’ve identified strengths, focus on leveraging those strengths to take advantage of opportunities and overcome threats. Consider investing resources in areas where you have a competitive advantage. If you’ve identified weaknesses, develop strategies to address them and minimize their impact. This could involve improving processes, hiring more skilled employees, or implementing new technology.
For opportunities, prioritize the most promising ones and develop action plans to take advantage of them. And for threats, prepare contingency plans to mitigate their impact and minimize risks.
Remember, a SWOT analysis is just the first step in strategic planning, and the real value comes from taking action based on the insights gained from the analysis.
Utilize this information to help guide your strategic plan. Access each major area and ensure your core strategy planning and lower level planning in your business are in line with a direction that emphasizes your strengths, minimizes and corrects your weaknesses, takes advantage of opportunities and proactively defends against threats! Your plan will be far more effective and likely to succeed if you keep these elements in the front of your planning activities.
Success is on the horizon for those bold enough to chase it!