Whether you are starting a new business or trying to reinvigorate your current one, strategic planning tools are readily available. In addition to advice from friends, family, bankers, and investors, having an effective business plan is an essential element for a successful financial outcome.
Of course, there are many different types of business plans in the virtual world and in the pages of economic texts. It can be overwhelming to research new ideas and to devise new outlines and goals. How do you choose one that fits your business?
If you are seeking a simple, straight forward and successful method, then the SWOT analysis might be just the ticket for you. It may sound a bit exotic, but SWOT is a strategic business planning tool that is perfect for new business projects, start-ups and/or business make-overs.
Get to Know SWOT Analysis
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. The first two concepts, Strengths, and Weaknesses are internal, reflecting the company’s current status. The last two, Opportunities and Threats, are external, indicating factors in the larger market.
By using the SWOT analysis, you can easily prioritize ideas and convert them to a viable strategy to help you achieve your financial and business goals. The SWOT template facilitates this, since it a basic two by two grid system, with the top two squares for Strengths and Weaknesses, and the bottom two for Opportunities and Threats.
As noted earlier, strengths refer to the internal positive attributes of the company. These are things that you can control and things that you do well, including assessing your assets. Reputation, education, knowledge, networks, skills, equipment, technology, customer base, and competitive advantages are all significant factors to consider.
A Broad View of the SWOT Situation
Weaknesses are also internal and are the negative elements of the company. These have the potential to detract from your strengths, and therefore, they constitute the factors that need improvement. What exactly is your business lacking?
Do you need new technology or equipment or an infusion of cash? Are there voids in your assets or gaps on the team? The answers to these questions could range from a re-evaluation of location and marketing to reorganizing customer service and competitive advertising.
In the realm of the external, opportunities are perceived as market and environment influences which can help your business to succeed.
All four of the categories do overlap a bit, which makes the SWOT analysis quite insightful. By studying the current market, you can ascertain how and where your business fits. Opportunities include business events for networking, buying trends upon which you can capitalize, customer satisfaction surveys and changes in regulations used to your advantage.
See Things Coming
Saving the scariest for last, threats are the elements over which you really have no control, such as unexpected competitors entering the field, unfavorable market trends or a supplier going out of business.
Other potential threats are changes in consumer behavior, technology lags and shortage of raw materials. When contemplating these types of issues, it should motivate you to develop contingency plans so that you are not completely blindsided by the unexpected.
Using the SWOT analysis at your business is also quite easy. It is best to select people from different areas of the company, if applicable. In this way, you will receive different perspectives on all four of the SWOT components. If you would like to think outside of the proverbial business box, then consider asking friends and customers to join as well.
How to SWOT your business!
For the SWOT analysis meeting, participants should be given sticky notes, and the first ten minutes should be for quiet individual brainstorming. Upon conclusion of the brainstorming, place the notes on a wall and group the ideas together by content. After doing this, if anyone feels inspired to add more ideas, then they should be encouraged to do so.
Once the ideas are arranged and brainstorming is officially finished, rank the ideas. There are different ways to rank them, but voting is an effective manner. Feel free to experiment with how many votes participants have in which categories.
The result of the “election” will be a rough draft of a list that may require more discussion. However, usually, managers, owners and/or CEOs will have the final say on the list. In this way, the analysis concludes with a prioritized list of ideas that can be then used as a business plan.
Take Action of the Results
Taking the list and converting it into a strategy to achieve your goals is well, the goal of the analysis. Depending on the nature and size of the business, the analysis can be applied in multiple methods, including timelines, policies, and organization. And even though a manger or owner made the final call, the business plan really is a group effort, to which employees and employers contributed. This is most likely a great morale boost as well!
If you feel that it is time to do something a bit different or to approach a business scenario in a unique manner, SWOT might be the solution for you. As demonstrated in this article, it is effective and easy, so perhaps giving SWOT analysis a try really is your best current business strategy.