having at“I don’t have a clue where this company is going…but we’re making really good time!”

A SWOT analysis is the second step in developing your “Strategic Plan.” The first step was to create your Mission, Vision, Values, and Purpose statements and then communicate them to every member of your team.

What is a SWOT analysis?

SWOT stands for…

• Strengths
• Weaknesses
• Opportunities
• Threats

In a nutshell, a SWOT analysis is the process of determining the strengths, weaknesses, opportunities, and threats of a business.

Why take the time and effort to conduct a SWOT analysis?

A SWOT analysis can help get your company pointed in the right direction, moving forward quickly and efficiently, and help you identify real and potential roadblocks to your success.

The basic SWOT analysis can apply to an entire company, a specific department, or just one particular project.

Here, I will focus on looking at an entire company.

In order to conduct an accurate SWOT analysis you must, figuratively, take a step back and look at your business with a “Bird’s Eye” view. In other words, take off the rose-colored glasses and imagine you are a consultant commissioned to do this analysis for this business. If the SWOT analysis is going to be accurate, you must be objective.

It is often helpful if you consult others in and outside of your company to assist you with the analysis. They may, and often do, see things that you don’t because they look at everything from a non-biased perspective.

As always, asking probing questions is the key. Stay focused. Keep the questions short, straight to the point. It’s also important to understand that “Strengths” and “Weaknesses” are usually focused within your own company, while “Opportunities” and “Threats” are usually focused outside of your own company.

OK, now let’s see what each area could typically consist of…

STRENGTHS

A few areas that this might include…

• People (your employees)
• Patents, trademarks, copyrights, or trade secrets (things that are exclusively yours, at least for a time)
• Market niches for which you are the “sole source”
• Areas in which your company excels
• Unique or top-quality equipment
• Capital reserves (so you can weather an economic downturn that might put some of your competitors out of business)
• Foresight (the ability to see where the market is going)
• Ability to change focus or direction quickly (to adapt to the coming market’s needs before your competitors)

Whatever makes you better than your competitors is a strength.

WEAKNESSES

A few areas that this might include…

• lack of operating capital
• lack of good leadership or experience
• old equipment
• over-staffing
• under-staffing
• “not invented here” syndrome (having the attitude that “if your company didn’t think of it, it is obviously a bad idea”)

Whatever makes your competitors better than you is a weakness.

OPPORTUNITIES

A few areas that this might include…

• a market segment that is not being served well
• weak marketing and sales materials
• low visibility in the market
• new or improved version of products or services

Any way to increase your market penetration or the strength of your company…is an opportunity.

THREATS

A few areas that this might include…

• government regulations
• new competitors
• negative press in any way relating to your product, market, or industry
• advances in your market by your competitors
• a pandemic like COVID-19

Anything that poses a danger to your product, your market segment, your industry, or your company itself…is a threat.

CONSIDER THIS…

Try looking at more than one area at the same time. For example, do you have a “Strength” that can be used to combat a “Threat”, or maybe to address an “Opportunity”?

A word of caution…a “Strength” can also be a “Weakness”.

Your manufacturing capacity might be a strength…unless you don’t have the sales to utilize that capacity. Then that capacity becomes a weakness because it is money that is tied up in equipment and resources that aren’t being efficiently utilized.

“The best way to predict the future is to create it.” – Abraham Lincoln

Especially when reviewing your “Strengths”, ask yourself if there is a need for a new market segment that only, or primarily, you can fill. The one who creates a new market segment often keeps the lion’s share even after competitors jump in.

SUMMARY

A SWOT Analysis can help get your company…

• pointed in the right direction,
• moving forward quickly and efficiently, and
• help identify real and potential roadblocks to your success.

So don’t skip this vital step on the road to creating your Strategic Plan.