Here’s a great rule of thumb for any of your future business endeavors: never go in without a plan. It’s not that you can’t be adaptable and think your feet. Some business have succeeded that way. But in today’s constantly evolving business climate, it isn’t wise. Without a distinct plan, you risk wasting a lot of time and money on bad decisions. You could avoid those decisions altogether if you took some time to map out a coherent business strategy. The SWOT analysis method is a great way to do that.
What is SWOT Analysis?
SWOT analysis is a simple and powerful tool for developing business strategies. It’s also flexible. This analytical tool can work for every scale of business from startups to Fortune 500 companies.
SWOT is an acronym. It stands for: Strengths, Weaknesses, Opportunities, and Threats.
Strengths and weaknesses are both internal–things you can change and have control over. These categories can include who’s on your team, what intellectual properties/copyrights/patents you have, and where your business is located.
Opportunities and threats are external–things that you probably can’t control. Things happening in the larger world and market surrounding your business. What existing opportunities can you leverage? What threats might pose issues in the future? These categories can include the price of raw materials, consumer trends, and competition.
How Do You Conduct a SWOT Analysis?
A SWOT analysis is a high-level leadership function, but it doesn’t have to exclude the lower tiers of the company. In fact, it should absolutely include management and employees from all levels. Gathering these people’s perspectives can give you a deeper view of your company as a whole.
Bring your people together. Ask them, “What are our strengths, weaknesses, opportunities, and threats?” Have each person write their answers — five to ten each — on sticky notes. Arrange those stick notes on a board and then have the room vote on which answers — again, five to ten in each category — are most important in their given category.
Once you’ve collected all the votes, you should have a list of five to ten items in each category that your employees consider the most important areas of focus in your company. Congratulations! You have just successfully identified what areas you need to game plan in order to achieve success and take your business to the next level.
A SWOT analysis can be incredibly simple. It doesn’t have to take much time or energy. But conducting a thorough SWOT analysis can help you identify the most important areas of your company. If done right, the results of a SWOT analysis will reveal the soul of your business. Knowing that can help you plan for success in the future.
Do this type of analysis regularly to stay nimble and you’ll achieve amazing results!