Business Tips from SCORE: SWOT analysis should be part of your business planning
Almost any planning initiative whether it be aimed at launch, growth, maintenance, or exit can apply the use of a SWOT — Strength, Weaknesses, Opportunities and Threats — analysis to give the plan depth. When launching a new product, rebranding, taking a new direction or even expanding by buying out a competitor this approach to developing a plan is beneficial. It’s an approach to planning that helps actualize your enterprise’s vision.
A good SWOT analysis becomes a roadmap since it points to elements of your business that are working, not working quite well, danger signs and potential new roads that could be taken. It allows you to prioritize elements that appear to be equal until evaluated one against the other. This process guides you to ways to improve your processes and procedures. And, it shows you where there are elements that can hold you back from accomplishing your stated goals.
The beneficial characteristic of using SWOT as a guidepost is that it presents a neutral analysis of what might be considered “the good, bad and ugly.” It can be used by owners, employees, investors, stakeholders, partners, board members and even customers since it is an objective view of the business.
The nice part of using SWOT, as part of a plan, is that it is not complicated and can be captured on one sheet of paper. When done right, the construction of a SWOT analysis is a good team-building exercise and promotes inclusion and belonging to an organization. When your team is engaged in creating the objectives and plans of action to address the objectives there is authentic buy-in.
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The quadrant that defines SWOT looks at the inside of an organization with Strengths and Weaknesses and the outside through the Threats and Opportunities. Let’s take a look at each quadrant by asking focused questions as offered by ClickFunnels:
Strengths: Does your current vision correspond with what you assess yourselves as doing well? What makes your organization unique? What does it do well? In what areas are you most successful? What are your competitive advantages?
Weaknesses: What area are in most need of improvement? What negative comments do you get from customers? Why do potential customers fail to convert? What are problems you most often run into? What are your limitations to growth or sustainability? What could your business do better to be more competitive? And, will the business be hindered by what we don’t do well today?
Opportunities: Where can you find more promising customers? What outside trends will positively impact your business? What upcoming events could prove helpful in sustaining or growing your business? Will your market segment experience growth in the future?
Threats: What new competitors might you face in the near future? What trends might negatively impact you? Is your marketing effort in a downward trend? Are there recent external developments that might cause your business challenges in the future? When we begin the planning process we are most likely looking at where are we now, where are we going and how are we going to get there.
Some elements of planning look to external factors to project to the future. These elements of SWOT are Opportunities and Threats. Some of our planning deals with the here and now relative to what is working and what is not. Strength and Weakness are those SWOT elements that are in the present.
Novuna Business Finance has some tips for conducting a SWOT Analysis: Give everyone on the planning team a pad of post-it notes to make their voice heard. This method prevents group thinking and makes it easy to organize the team’s ideas. Decide on 3 or 4 bullet points per quadrant and organize ideas underneath each header. Use flip charts. One page or more for each of the SWOT elements and then post them so everyone can see previous contributions as they work through each element. The post-it notes are affixed to the post-it pads. Allow additions to past SWOT elements that arise as the team works through the total analysis.
Honesty is critical and this is tough because with a small business there is the ownership factor and facing difficult issues are tough. Another tip is to give the planning team the SWOT structure and have them prepare their contributions in advance so they come to the meeting prepared to contribute, not just think about each component of SWOT.
SWOT analysis is an excellent tool to add to business planning since it looks both internally and externally to measure the environmental factors that impact the organization.
Contributed by Marc L. Goldberg, Certified Mentor, SCORE Cape Cod & the Islands. www.capecod.score, email@example.com, 508-775-4884. Source: SWOT Analysis, ClickFunnels, Smart Business Planning, Novuana Business Finance.
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