Some say that business success is 90% planning and 10% execution, and achieving any form of successful venture requires a clear-sighted identification of gaps and opportunities in your business, as well as your competition. And this can be achieved through a comprehensive SWOT analysis.
But we’ve all heard about SWOT analysis and we know it is a strategic planning tool that business owners use to examine the business’s strengths, weaknesses, opportunities, and threats.
But the question is…
When was the last time you sat down and performed a SWOT analysis for your business?
If you’ve been running your business for a while, do you know what are the latest technologies that are available to help capitalise your business to boost productivity? What software can you use to remain competitive in the marketplace? As well, what are some new opportunities that you would like to explore or dominate?
Most business owners think that SWOT analysis is only performed before the launch of a business. But in the current competitive era with technology evolving so rapidly, performing SWOT analysis on a regular basis is becoming more and more pertinent in the strategic planning phase for larger size businesses. We need to embrace that this strategic tool can be applied on any occasion: before venturing to expansion, before business process reengineering, growth, and pre-partnership planning.
Here are six benefits of doing a SWOT analysis:
1. Attain clarity and direction for your business.
2. Avoid fruitless and costly pursuits.
3. Develop conscious awareness before accelerating your business.
4. Understand when to “let go” of a business opportunity.
5. Optimise your hard-earned money.
6. Provide a foundation to develop business goals and strategies.
We recommend that SWOT analysis be performed half-yearly, yearly, or monthly depending on your business dynamics.
To understand how it’s done, here are four key components of conducting a SWOT analysis (with self-analytical questions).
Strengths
The “S” stands for strength, often used for internal evaluation on your core competencies in the marketplace. If you have trouble finding your point of difference, USP, or unique propositions in the marketplace after so many years of running your business, the best place is to start here by listing out your strengths in dot points.
Listing your company’s strengths is fun, but it is also the most overstated component. So, keep it unbiased and objective-oriented.
Here are some tips to work out your strength, as follows: –
- List your competitive advantages one by one.
- List your cutting-edge features and benefits that allow your company to respond well to your customers and other external factors better than your competitors.
- Identify other advantages from your business’s strengths that can be converted into competitive advantages. Examples include:
- Explain the process of your product or service. Case study: Beer company Anheuser–Busch InBev was the world’s largest brewer. One of their keys to success is demonstrating the brewing process in their Ads.
- Describe your skilled workforce: credentials and experiences, Market share, Management skills, and Philosophy.
Identifying your business strengths will help you differentiate your brand, offer, and services. It may even ignite your confidence to a new level when it comes to dominating your market share. If you need help with identifying your strength, do not hesitate to reach out to us.
Weaknesses
We all know that “W” stands for weaknesses. Weaknesses are synonymous with gaps that might cause problems for the business in the future.
However, a wise man once said that we should not see weaknesses as faults, but instead acknowledge and recognise them to avoid costly mistakes and fruitless pursuits. And if they are handled wisely, every flaw can be translated into practical opportunities for innovation and progress and offer a chance to tighten your business niche and tone up your company’s offerings and services.
Therefore, it is imperative to establish a clear understanding of the weaknesses within your business to form a realistic response to overcoming them: realistic means accepting the brutal truth.
To illustrate my point, here are some household brands that failed to recognise their weaknesses and ended up in closure:
Kodak
Blockbuster
Polaroid
Toys R Us
Borders.
Sometimes, the proper action to handle weaknesses is innovation. And at other times, it could mean selling the business off before the business model becomes obsolete or runs too deep in debt. Therefore, to assess your business weaknesses, perform the following actions:
- List any outdated facilities and determine the costs of renovation.
- List outdated technology and determine the prices to refurbish the user experience.
- List any undercapitalised areas.
- Identify any unstable workforce, skillset, team members, or weakest link.
- List past planning failures.
- List your budget and capital for the business.
Remember, weaknesses are not that bad; they can help strengthen your niche and re-think the way you optimise your resources. If done well, they can help your company maximise its profit and keep its wealth.
Opportunities
When you tackle the “O” you need to switch your thinking to External opportunities. It can be opportunity for expansion, growth, mergers, acqusitions, or grapping the first-mover advantage.
Let’s talk about expansion and growth. Most businesses would want to grow and expand their businesses from time to time, and become so excited that they neglect doing the SWOT analysis. They jumped on the wagon and execute their dream plan but end up losing money after a few months: paying $5K – 10K. To feed their illusional opportunity that promise salivating returns, they hang on to it. And with each passing month, the business owner quietly say to themselves, “let’s give it one more month”. And with each passing month, it quickly turn into a year, and until you know it, that business opportunity now becomes a miserable torment for the business owner as it had burnt $70,000 in cash.
Do your SWOT analysis. It will save you money. With every potential opportunity, it comes with potential expenses.
Let’s take a look at “opportunities” that you can pursue, as follows:-
- A gap that hasn’t been filled.
- An opportunity only made known to a small group of people, and no one had the competency to take it on.
- An area that lacks a particular service
- New and changing customer needs
- Development of new products or services
- New government policies/initiatives to promote economic growth.
- Changing economic factors
- New technologies are made available within a specialised group but not to the public.
- Weak competition.
- Other factors.
But be warned, chasing opportunities is similar to having a shiny object syndrome, as profitable business opportunities can appear in different forms.
The challenge here is to overcome the shiny object syndrome. Note that you will need to work out the establishment costs for every pursuit: such as IT, website, lead funnel, software, process, and integration. As well as maintenance costs: lease, license fee, outgoings, marketing, and Human resources.
Also, ensure that the opportunity is well thought out to avoid an unprofitable venture: loss of time and money.
To ensure you maximise your opportunity, you must ask yourself these questions.
- What is the end goal? Do you have the end-in-mind?
- Build and sell?
- Build, find a partner to buy it off?
- Build, and give it away free?
- What are the monthly expenses if there is zero income for the next six months?
- Do you have the right team in place to execute the opportunity?
- How much loss can you incur before you pull the plug?
- Is it sustainable in the long term?
- What’s the time requirement?
- What’s the investment costs?
- Travel distance?
- Is it within your area of expertise?
- Do you have the people with the right skillsets, qualifications and competency to handle it?
Remember, every opportunity comes with a cost. We cannot stress enough. Be impartial and assess the cost of launching the opportunity and sustaining it. And do your SWOT analysis.
Threat
Ask yourself what external threats exist that you should address.
Every business is under threat in the SaaS (Software as a Service) and AI (Artificial Intelligence) era. The threat of being obsolete, the threat of investing more money to level up, and the threat of experiencing a heavily reduced margin.
The good news is that it will be your key to a higher profit margin if managed rationally. Being rational towards threats means asking yourself, can my services be further diversified to encapsulate my existing business model?
For instance, ChatGPT threatens copywriters and content creators worldwide. Still, only astute professionals would think of ways to sell their services by developing copywriting Command Prompts for ChatGPT and selling them as done-for-you services to business owners.
On the other hand, handling threats with negative emotions and discontent will affect your creativity to create a profitable business model. Do not get upset with inevitable forces; there will always be software or tool that will disrupt your business ecosystem. Here is a myriad of factors that are beyond your control.
- Changes in customer preferences and buying behaviour: customers like to shop online VS in-store.
- Economic factors: trade restrictions and taxes
- Pandemic and the global crisis: Covid-19
- Shortage of resources, e.g., materials, skilled staff
- Legal issues
- legislation (national and state)
- by-laws (local)
- contract law
- other legal issues
- Developments in technology
- Actions are taken by your competitors, including:
- Better product and services
- Cut-throat pricing models
- Advanced software and technology
- Discounts and promotions
- Strategic alliances (a form of business co-ownership that creates corporate entities through the cooperation of two or more firms)
Listing out the threat will help you develop a strategy to handle the items of concern. And here are some of the directions that some business owners have taken:
- Sell the business to cut the loss.
- Outsource staffing to another country.
- Attend Business Training Program to acquire the latest business and marketing strategies.
- Restructure their business model to accommodate customer behaviour
- Research competitors’ products and services to find flaws and opportunities for growth.
- Invest in research and development.
- Engage a business advisor for strategic.
In Summary
SWOT-analysis helps business owners develop clarity and directions before making business decisions. It should be performed whenever the situation calls for it. You do not have to wait until you conduct your business planning.
We hope some of our SWOT analysis self-enquiry questions help you dig deeper into your business affairs.
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