As we approach the end of the year, it’s a good idea to set aside some time to reflect on your business and prepare for what’s next. What is going well? What needs to change? What are the company’s strengths and what are the opportunities for improvement?
I’m working through this process with one of my clients. They have grown significantly over the past three years, more than doubling the number of employees. They are looking at adding some new business offerings and want to make sure that they have the right administrative functions, skills and organization in place to support them.
To determine this, we’re using a simple but powerful tool called a SWOT analysis. “SWOT” stands for Strengths, Weaknesses, Opportunities and Threats. By taking an objective look at each of these areas as they pertain to the company, we can identify any gaps and then strategize how to fill in those gaps.
The Strengths and Weaknesses components require looking inward – evaluating things you have control over and can change. For example, your processes, location, team. The Opportunities and Threats components require looking outward – external forces you may not be able to control, such as competitors, customer buying trends, new regulations.
Key to an effective SWOT analysis are good questions and honest, well thought out answers. Here are some examples of questions.
- Which of our processes are working effectively?
- What are the strengths of our team, e.g., experience, knowledge, level of education, skills, network or reputation?
- What are our tangible assets, e.g., customers, technology, equipment, capital, or patents?
- What is our competitive advantage?
- Which of our processes are not working?
- Are there skill, knowledge or experience gaps on the team?
- What assets are we lacking, e.g., capital, equipment, up-to-date technology?
- Is there something within our control that is holding us back from being competitive?
- Are there recent changes in the market that could create an opportunity?
- Is the timing critical to take advantage of that opportunity?
- What events are coming up that we could leverage to grow the business?
- Are there any impending changes to regulations that could work in our favor?
- Who are our current and potential competitors? What are their strengths?
- Is there potential for a significant change in prices or availability of key suppliers?
- Are there shifts in customer buying trends or the economy that could impact revenue or profits?
- What other factors beyond our control could put the company at risk?
Of course, you’d want to add more questions that are specific to your business. Understanding your company’s strengths, weaknesses, opportunities and threats will help you make informed decisions about what you need to do to take your business to the next level.
Next time we’ll talk about some specific things to do and not do in your SWOT analysis.
Please contact me if you need help in going through the process.