You have all heard about SWOT analysis. Whether in a textbook, at a seminar, or in a meeting, examination of company Strengths, Weaknesses, Opportunities, and Threats is a popular form of analysis in corporate America. Unfortunately, as corporate America does from time to time, the concept has been made far more complicated than it needs to be. SWOT analysis is important for every small business, and it does not have to be a difficult, time-consuming endeavor. It’s made a big difference for many of my clients. Today I’m going to walk you through the first two elements of the analysis, Strengths and Weaknesses.
The first step in the SWOT process is identifying the strengths of your organization. For our purposes, think of your strengths as things your company does well. For instance, you may have a friendly and attentive staff. You may be well-capitalized. Your strengths are internal to your company, which means they should reflect your organization, not your markets. “More affordable than the competition” would not be a strength—but efficient procedures and effective cost-control measures would be.
Weaknesses, obviously, are areas in which your organization struggles. Like strengths, weaknesses must be inwardly faced. Examples could include high labor costs, poor customer service, and weak leadership. External or market factors should not factor in to this part of the analysis… the national chain store moving in across the street is not a weakness.
Once you have identified a comprehensive list of company strengths, evaluate how well you leverage your strengths. It is amazing how many businesses fail to take advantage of strengths. For instance, I have seen plenty of businesses with fantastic, customer-oriented employees completely negate this advantage by so overloading each employee that they have no time to interact with customers. This is like having Lebron James on your basketball team and not giving him the ball. Don’t do it!
Some weaknesses must eventually be turned into strengths in order to take advantage of new opportunities to to fend off outside threats. A long list of weaknesses can be demoralizing, so prioritize them based on importance to the business and go to work developing a plan to turn them into a strength, one weakness at a time as needed to take advantage of those opportunities or fend off those threats.
You may think that the strengths and weaknesses of your business are obvious, but you will be amazed at how much insight you gain from the simple process of evaluating and recording them on a sheet of paper. You cannot take advantage of your strengths until you have identified them—and you cannot eliminate weaknesses until you know where they lie.
Check back soon for part two of this series, where we will move on to Opportunities and Threats.
Have you identified the strengths and weaknesses of your business? How has this process helped you? Leave a comment and share your thoughts below!