SWOT ... what?
How to identify your strengths, weaknesses, opportunities and threats
If you thought SWOT analysis was anything to do with a long-forgotten US cop show, you’d be wrong. It’s an essential part of any business plan – and forces you to confront your weaknesses. The resulting 'reality check' is a key way of driving your business forward.
Be honest with yourself. Preparing a SWOT analysis is like being on a diet – if you 'cheat', you're only cheating yourself.
SWOT stands for:
�The secret is to use your SWOT analysis to extract some useful objectives.�
Listing these elements allows you to also include the actions you are already taking, or plan, to counter any weaknesses and threats – and promote your strengths; thereby helping to focus your efforts where it's most needed in the business. The SWOT analysis can take the form of a simple list or can be represented by a chart.
Of course, the secret is to use your SWOT analysis to extract some useful objectives. Set yourself a checklist of actions and objectives which will mitigate your weaknesses and play to your strengths. This might involve taking on advisors, buying insurance, or even something as simple as setting your priorities so you tackle key areas of exposure first. A list of these priorities demonstrating a proactive approach will impress a bank manager more than wild financial speculation.
If you are doing a SWOT for the first time, you can do this by yourself or with others," says Emma Williamson, a management consultant who now also runs online babywear boutique Little Blue Dog.
"Firstly ask yourself the question 'What does my business do really well?'" Allow yourself a few minutes to "brain dump" as many things as you can. The key to this exercise is not to dwell: "Don't analyse your answer, just go on and repeat the two minute exercise with the other three questions. What are our weaknesses? Think internal weaknesses. What opportunities do we have as a company? What threatens us as a company?
"Only when you have finished, should you start to analyse and elaborate on what you have written. When we did this exercise for my babywear design business, the fact that we did not have internet shopping on our website was of course a weakness – but going on to allow consumers to shop online was also an opportunity for us to increase our revenue. Weaknesses are often a future opportunity for businesses."
And, stresses Emma, once you have carried out your SWOT analysis, don't think you can just forget about it. She says: "Small business owners should do this exercise annually. It is a vital part of business planning, because it forces you to think about how you are performing. The SWOT also acts as a great roadmap, for working out, where as a business you are going, and it forms the basis of your target setting."
No pain, no gain
Chris Roche of Coleshill-based IT company Acutec acknowledges that putting together a SWOT analysis can be painful and time consuming. But he says the exercise helps really concentrate the mind to make sure you are heading in the right direction, within your relevant sector. He urges meticulous market research to help identify threats from successful competitors.
"There are various elements of an IT company's SWOT analysis that will take your business in a particular direction and, like any company, can allow you to concentrate on strengths and opportunities for marketing purposes.
"We identified that we have a strong management team, are flexible to customer needs and have a broad range of skills provided by qualified staff.
"The SWOT also allowed us to identify weaknesses that were worked on over a six-month period. We removed many of them but new ones will appear dependent on the business climate – there will always be outside threats.
"It can be hard work to do the SWOT analysis, but you should do market research first – look at your successful competition first to see why they are succeeding. With everything else going on, it can be hard to complete your SWOT analysis– but because things are changing constantly, you really do need to keep on top of it."