Maintaining the overall health, strength and success of your business takes time, resources and money. As a business owner, it can be difficult to see the forest for the trees when you’re dealing with minute details and putting out large and small fires each day.
One of the best ways to assess the overall performance and so-called beating heart of your business is by conducting a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats, and performing this comprehensive evaluation shines a light on what your business does well and where you’ll need to improve.
Internal Factors: Strengths and Weaknesses
The S and W initials of this SWOT acronym refer to strengths and weaknesses. What does your business do well and what does it need to work on?
Strengths
In analysing strengths, consider some or all of the following questions:
- What does your business do well, both in general and for your customers?
- What are some unique skills of your business?
- What specialised knowledge does your business have that your competition doesn’t?
- What sets you apart from your primary competition? What do you do better than them?
- In what area is your business most profitable?
Weaknesses
When assessing weaknesses, think about characteristics of yourself and your business that could affect positive progress and prevent you from achieving short and long-term goals.
- In what areas do you need to improve?
- What resources do you lack? If you’re a startup, for instance, one weakness may be a lack of credibility and reputation in the overall business marketplace because your brand needs to be developed or you may have limited capital to invest.
- What parts of your business are not very profitable?
- What is costing you the most time and money, but shouldn’t be?
External Factors: Opportunities and Threats
The O and T initials of a SWOT analysis stand for opportunities and threats — external conditions that could potentially change your business’ performance to some degree, either positively (through opportunities) or negatively (through threats).
Opportunities
Opportunities are external conditions that help you achieve your business’ objective. Things related to clients, customers and technology are all part of the opportunities quadrant. In assessing your business’ opportunities, think about the following questions:
- What are the business goals you’re currently working towards?
- How can your business do more for your reliable customer base?
- What role does technology have in enhancing your business? This doesn’t always have to be the latest gadgets for employees but can rather relate to useful tools that make their work more productive. Maybe your business needs a new web application to make daily processes more efficient, or you need new time-tracking tools.
- Are there new target audiences your business has the potential to reach as the result of new product development?
Threats
Threats are external conditions that could potentially harm your business’ performance. Many of them may relate to competitors and how their success could hurt your business. Consider the following questions when assessing threats:
- What general obstacles does your business face?
- Look at your biggest competitors. What are their strengths? What do they have that you don’t? What are your competitors doing that you’re not?
- How is the health of the New Zealand economy overall? What are some projected forecasts for how it will perform in general?
- How is your industry doing? Is it healthy and thriving or is currently struggling?
Analysing Data
Once you compile all this information, you can use it to identify new strategies and goals for your business. Take a stab at combining strengths and threats to identify risks you can potentially eliminate or look at your weaknesses and opportunities sections to create a separate list of areas that are ready to be improved.
Many online tools are available as well. Whether you perform a yearly, biannually or monthly SWOT check, it can help you accurately evaluate the overall health of your business.
