You have heard about SWOT (Strengths, Weaknesses, Opportunities, and Threats), but when was the last time you sat down and performed a SWOT analysis for your business: how you and your company can take advantage of opportunities in your marketplace, dominate the market with your strengths, overcome your company’s weaknesses, and head off colossal threats?
Most business owners thought that SWOT analysis could only be performed during the business-planning stage. The good news is, it can be done on any occasion: before venturing to expansion, growth, or partnership.
The benefits of doing SWOT analysis are as follows: –
- Attain clarity and directions for your business.
- Develop timing awareness before accelerating your business
- Understand when to “let go” a business opportunity.
- Optimise your hard earn money.
- develop business goals and strategies for achieving them
- Refine your business better
We recommend that SWOT analysis be performed half-yearly, yearly, or monthly depending on your business activity. To understand how its done, here are four key components of conducting a SWOT analysis.
If you have trouble finding your point of difference in the marketplace, start listing your strengths.
Listing your company’s strengths is fun, but it is also the most overstated component. So, keep it unbiased, here are some tips, 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 is the world 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
Identifying your business strengths will help you differentiate your brand, offer, and service. It may even give you the confidence to dominate your competitors.
Do not see weaknesses as faults, instead acknowledge and recognise them to avoid costly mistakes and fruitless pursuit. If done wisely, every flaw can be translated into an opportunity for innovation or the tightening of your business niche to tone up the 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 the brutal truth.
Famous companies that failed to recognise their weaknesses were:
- Toys r Us
Sometimes the proper action to handle weaknesses is innovation; other times, it could be selling it off before the business becomes too deep in debt. Therefore, to assess your business weaknesses, perform the following actions: –
- List out any outdated facilities and determine the costs of renovation.
- List out outdated technology and determine the prices to refurbish the User experience.
- List out any undercapitalised areas
- Identify any unstable workforce, skillset, team members, or weakest link.
- List out past planning failures
- List out your budget and capital for the business.
Remember, weaknesses are not that bad, it can help strengthen your niche and re-think the way you optimise your resources. If it is done well, it can help your company maximise its profit and keep its wealth.
Every business will expose to business opportunities to branch out, expand (bringing in more people), and grow to the next level from time to time. And although it is exciting to jump on the wagon and execute the dream plan, most enthusiasts end up losing money after a few months: paying $5K – 10K every month to feed an illusional opportunity that promise salivating returns. And with each passing month, the business owner self-talk to himself, “let’s give it one more month”. And month 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.
With every potential opportunity, it comes with potential expenses.
Chasing opportunities is similar to having a shiny object syndrome as profitable business opportunities can appear in different forms, 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.
The challenge here is to overcome the shiny object syndrome. Take note that you will need to work out the establishment and maintenance costs with every opportunity.
Also, ensure that the opportunity is well thought out to avoid an unprofitable venture: loss of time and money. Therefore, 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 the costs of sustaining it.
If it is managed rationally, it will be your key to a higher profit margin. If it is handled with emotion and attachment, it may end up costing you more to operate your business. Do not compete with inevitable forces, and here are some examples of factors beyond your control.
- Changes in customer preferences and buying behaviour: customers like to shop online VS in-store.
- Economic factors: trade restriction 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 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
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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