Previously we discussed the importance of SWOT analysis for businesses of all sizes. We also took a look at the first part of that process, identifying strengths and weaknesses of your organization. Today we are going to examine the second part of the analysis: the Opportunities and Threats facing your business.
While the Strengths of your company were identified by looking inwards, the Opportunities are spotted by looking outwards at your market. Your products may be of much higher quality than the competition. You may have a clearly defined niche within your market and be facing no direct competition. Or you may see an opportunity to expand your niche due to the struggles of your competition. Just as you did with your strengths and weaknesses, create a list of the opportunities available for your business to take advantage of.
Threats refer to external factors or conditions that have the potential to negatively impact your business. These could include other businesses hiring your top talent away from you, competitors undercutting your prices, or other businesses invading your niche in the market. If you are not looking for these threats, you may not spot them until it is too late. That is one of the reasons this exercise is so valuable, it forces you to keep your head up, so to speak, and to be aware of changing market conditions.
When you have a list of the Opportunities available to your business, you can then create a plan to take full advantage of them. I recommend categorizing opportunities based on their timeframe. For example, a competitor closing down shop may demand a rapid response from your business, while other opportunities may be available for a longer period of time. Identify the most lucrative opportunities and create an action plan for taking advantage of them.
Finally, the key question to ask in regards to Threats facing your organization is “how can we minimize our risks?” Organize each threat in terms of severity and timeline, as you did with your opportunities. Some threats will demand instant action, and it is important that you act quickly when necessary.
Once you have completed your SWOT analysis, not only will you have a detailed understanding of your current situation, but you will have a clear understanding of where your business needs to go. This is an incredibly valuable exercise to go through and I highly recommend it for businesses of all sizes.
When’s the last time you conducted a SWOT analysis in your business? Was it helpful? Leave a comment below!