How often do you perform a checkup on the health of your business? If your like most, not often enough.
As business owners, we sometimes get so busy trying to move things forward that we often forget to stop for a minute to make sure we are still on the right track. Conducting routine checkups on your business in the areas of marketing, operations, human resources and finances can go a long way in keeping your business out of trouble.
Whether you are creating a new marketing plan, making a key hire, or evaluating current market conditions, a SWOT analysis is a quick and effective way to get a clear picture of the situation.
What is a SWOT Analysis?
It's a strategic tool used to evaluate the Strengths, Weaknesses, Opportunities and Threats of a given situation such as a project or business venture. It's usually presented in a matrix format, like the image below, but can be written out anyway that makes sense for you.
When and how often should you conduct a SWOT analysis?
Every business has different needs, but I would suggest you conduct a SWOT analysis at least once every 6 months, or whenever a significant decision is to be made for your business or external factors are looming, that can impact your business. The nice things with a SWOT, is that you can use them to evaluate pretty much anything. Just a few examples are:
- Current state of your business
- When forming your marketing and operational plans
- Making a key hiring decision
- Making an important decision that will impact your company
- When evaluating current market conditions
Elements of a SWOT Analysis
Strengths – The things that give your business an advantage in the given situation you are evaluating. This may be your product/service, key employees, market position or any number of things that give you an advantage over others.
Weaknesses – The things that place you at a disadvantage in relation to others. It's the same as your strengths, but you will be listing your limitations here.
Opportunities – External factors that can come into play that will give your business an advantage. An example would be a customer trend that is moving to your advantage.
Threats – External elements in the environment that could be disadvantageous to you. An example would be a housing market crash in your region that could potentially adversely affect your business.
As you can see, the Strengths and Weaknesses are internal factors, while Opportunities and Threats are external factors that can impact your decision making.
Tips on conducting an effective SWOT analysis
Get your team involved. Try and get others involved in the process, especially if they will be the ones affected/implementing the decisions that will be made. Brainstorming as a group will bring ideas, and expose potential threats that you may not have seen.
Brainstorm. Don't just list out the best ideas……list all of the ideas, no matter if they seem a bit off the wall. The important thing is to get all of the ideas on the table and then edit the list as a group to bring out the strongest points. Sometimes that odd ball suggestion will lead you down the path to an awesome breakthrough you never thought of before.
Bring in an outsider. Bringing in someone not as close to your business can give you a fresh perspective and help you avoid inadvertently trying to sway the analysis towards your bias. Another trusted business owner, your accountant or attorney are great people you can bring into the mix, depending on the situation you are evaluating.
As you can see, a SWOT analysis is a quick and easy way to create a well thought out plan for your decision making. By bringing your entire team into the process, you can create an environment of open communication and idea exchanges that can open up opportunities not seen before. If you'd like a template for creating your own SWOT analysis, you can download it here [Free SWOT Analysis Template]
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