As per a study conducted by Forbes, in December 2020, about 31% of small businesses in the United States stopped operating.
If your business IS operational, there may be places that you need to improve upon. One of the best ways to identify these places is by doing a SWOT analysis.
So, in today’s post, I will tell you what SWOT analysis is, how you can perform it for your business, and why you need to complete a SWOT analysis.
What Is SWOT Analysis?
SWOT analysis or SWOT metrics is a strategic planning tool used to evaluate the strengths, weaknesses, opportunities, and threats of a business or any other entity, such as a project, product, or even an individual.
It provides a structured framework for assessing internal and external factors that can impact the success or failure of a business.
In simple words, SWOT stands for Strengths, Weaknesses, Opportunities, and Threats and it is an assessment tool used to help you identify the areas where your business is excelling and the places where you need to improve.
Note: SWOT analysis is also called SWOT metrics, so if you hear the term “SWOT metrics”, do not get confused.
Why Is SWOT Analysis Used?
SWOT analysis or SWOT metrics can be conducted for several reasons, such as:
(1) Strategic Planning
SWOT analysis helps in formulating effective strategies by identifying internal strengths of your business that can be leveraged and opportunities that can be pursued, as well as understanding weaknesses that need to be addressed and threats that must be mitigated.
(2) Decision Making
SWOT analysis provides a structured framework for decision-making by considering both internal and external factors.
SWOT analysis helps in evaluating options and selecting the most suitable course of action based on the organization’s strengths and opportunities while minimizing weaknesses and threats.
(3) Competitive Advantage
By assessing internal strengths and leveraging them effectively, you and your business can gain a competitive edge over your competitors.
SWOT analysis helps identify unique selling points (USPs) and areas where your business excels, enabling it to differentiate itself from competitors.
(4) Risk Assessment
You can utilise SWOT analysis to identify and analyse potential threats and weaknesses to proactively address risks and develop contingency plans.
This helps in minimizing potential disruptions to operations and enhances risk management practices.
(5) Resource Allocation
SWOT analysis helps in prioritizing resource allocation by focusing on areas that offer the greatest opportunities for growth and improvement.
It assists in allocating resources efficiently and effectively based on the organization’s internal capabilities and external market conditions.
(6) Business Evaluation
SWOT analysis provides a comprehensive evaluation of your business’s current position by examining its internal (executives, employees, customers, KPIs, etc.) and external factors (market trends, competitors, etc.).
It helps in identifying gaps and areas that require attention, which, as a result, aids in performance improvement and long-term sustainability.
(7) Communication And Collaboration
Conducting a SWOT analysis involves gathering inputs from various stakeholders within an organization.
This process promotes collaboration, knowledge sharing, and a shared understanding of the organization’s strengths, weaknesses, opportunities, and threats.
It also facilitates communication of the strategic direction to stakeholders.
When Should You Perform A SWOT Analysis?
I’d suggest It’s a good idea to perform a SWOT analysis every six months to a year or any time there’s a big change in your business, for example, when you are launching a new product.
If you’re doing it properly, you’ll have new breakdowns every time and you’ll have a new priority list to work on until the next SWOT analysis.
Who Performs The SWOT Analysis?
SWOT analysis, no matter how effective, will be useless if you don’t have proficient personnel to make the necessary changes or at least make a plan to make the necessary changes.
So before you start the SWOT analysis, you will want the leaders to participate. However, this is not necessarily a top-down exercise.
You should, instead, gather inputs from employees who are intimately familiar with the day-to-day processes and realities of the business, such as:
- Customer service team
- Marketing team
- Product development team
- Content creation or copywriting team
- Analytics team
- Human resources
- etc.
How To Perform A SWOT Analysis?
Now, I’m going to walk you through what to include in each quadrant and how to format everything.
Then, I’ll walk you through each category and also give you some questions to ask yourself and your team to help you if you get stuck.
A SWOT analysis can be daunting and confusing so I would request you to break it down into different categories and focus on one category at a time.
If I were to perform the SWOT analysis, I will do it in the following order:
Step 1: Create A Set Of Questions Or Specify Your Objective
The first step is to create a set of questions that you need answers for or set the objective for conducting the SWOT analysis.
You need to do this to keep your analysis focused!
When I perform a SWOT analysis for my business, I phrase my objective as a question that I find answers to.
For example here are a few questions that I ask myself:
- Shall I expand my services to help businesses track their website and app performance through Google Analytics?
- How can I improve the marketing efforts?
- In what ways can I improve customer retention?
- Which lead magnets shall I create to increase the leads?
- Shall I conduct one inner circle call or two inner circle calls to help my students get results faster?
I found that starting with the objective helps to focus the efforts and discussions right from the beginning and it ensures that everyone is working toward the same goal.
Step 2: Data Collection
The second step is to gather data by researching competitors or by asking employees or industry experts for input.
Gathering data and getting input from others is crucial so your analysis is based on fact and measurables and not on assumptions.
I divided this step into 3 substeps, as follows:
Step 2.1: Gathering Data
Gathering data is the process of collecting numbers or performance metrics for the analysis objective.
For example, if the objective of performing the SWOT analysis is to increase sales, you can start by collecting:
- The number of sales you’re generating now
- The cost for generating each sale (Cost per acquisition or conversion)
- The average order value (AOV) or the average earnings per sale
- The marketing channels that drive sales
- etc.
The above information will help you to set goals and see if your effort pays off post-analysis.
Step 2.2: Research Competitors
In this step, you find out what your competitors are better at, what their customers love about them, how they treat their customers, etc.
You will need this information to identify the things you do better than your competitors and the things that you do worse than them.
This information is extremely important for your positioning and if you are the CEO or founder of a large organization, you’ll need to ask for input as you might not know everything about your business or the customer journey.
When I conduct a SWOT analysis, I like to seek out the opinions of my mentors and students so that I can get an idea of things that I don’t know are happening.
You can, additionally, use tools such as Semrush or Ubersuggest for finding information about your competitors.
Step 2.3: Ask For Input
When you ask for input, your employees can feel heard and appreciated. Ideally, when you ask for input, you should send a set of questions to your team members or employees related to their department.
You can request them to summarise their answers in 2-3 bullet points per question.
And, please give them time to think about each question!
Giving your employees time to mull over the questions will help them come up with fully-formed answers, answers that make sense.
So, dear corporates, I know you only have 3 seconds to get the answers but believe me, giving them hours or a couple of days won’t hurt your business.
Patience, boys! Patience!
Step 3: List The Strengths, Weaknesses, Opportunities, And Threats Of Your Business
Now, we are going to perform the analysis so I request you pick up a piece of paper and divide it into 4 quadrants.
Now, name the first quadrant STRENGTHS.
The second quadrant is WEAKNESSES.
The third quadrant is OPPORTUNITIES.
And, the fourth quadrant will include the THREATS to your business.
Step 3.1: List The Strengths Of Your Business
Now, in the first quadrant, you will write the strengths of your business.
Write the things that you do exceptionally well!
The strengths can be anything, such as:
- Company culture (LOL! 😂)
- Product design
- Customer satisfaction
- Employee satisfaction (LMAO! 😂)
- Social media presence
- Lower cost per lead
- etc.
If you are not able to come up with the strengths of your business, you can ask yourself the following questions:
- What do our customers like about us?
- Where were we recognised for our service?
- What are we experts in?
- Why do our customers choose us and not our competitors?
Step 3.2: List The Weaknesses Of Your Business
Now, let’s move on to the second quadrant – Weaknesses. Here you will write things that do not look well for you.
If you want to know what harms your business, this is extremely important.
You MUST listen carefully to the input given by your employees and customers without getting hurt or taking it personally!
To help you, here are a few questions that you can ask yourself:
- What negative feedback does my business receive from customers most often?
- What stops potential audiences to become customers?
- What is delaying the business’s processes or deliveries internally?
- Where is the business inefficient?
- Do the leaders in my organization know how to lead?
- Where do my employees lack training or knowledge?
Step 3.3: List The Opportunities Of Your Business
Now, in the third quadrant, write the opportunities for growth.
I see the opportunities as things I would be able to do if there were a few things working in my favour.
For example, I would ask the following questions to discover the opportunities:
- Is there a problem that my audience is currently facing that I can solve by introducing a new product?
- Can I hire someone with the required skill set to fulfil a role?
- How can I better support my team?
- Do I need to conduct training to help my employees develop new skills?
- Do I need to learn things to better manage my business?
Step 3.4: List The Threats Of Your Business
The fourth quadrant is for threats. Threats can be from competitors, changes in the industry, pandemics, etc.
You should list internal and external threats because both play a large role in the health and success of your business.
You can ask yourself the following questions to find out the threats:
- Are there chances of any changes happening in the industry like banning cookies for gathering information?
- Have the sales dropped? If yes, by how much?
- Does the policy change increase the cost per lead?
- What is causing negative customer feedback?
- Why do employees quit? Is it due to a pathetic manager?
Step 4: Establish Priorities For Addressing The Findings
Now that your SWOT analysis is complete, it’s time to set priorities to address the findings.
In this step, you will need to create an action list and prioritize the items on that list. Once that is done, you delegate to employees, outsource or complete the task on the list.
But before delegating anything to employees, you’d need to polish and restructure the bullet points and rephrase them as tasks and subtasks.
Now, you need to prioritise as YOU CANNOT DO EVERYTHING AT ONCE! An eye-opener, isn’t it?
I usually prioritise the tasks as follows:
Priority 1 Tasks:
These are the tasks for which I have resources already.
Priority 2 Tasks:
Tasks for which I can quickly or affordably get resources are the Priority 2 Tasks.
Priority 3 Tasks:
Priority 3 Tasks are those for which there are no resources currently but there is a workaround.
Priority 4 Tasks:
These are the tasks for which you do not have resources and there is no workaround.
Step 5: Create A Strategy And Allocate A Team To Implement The Findings
Now, we come to the fifth step: Create a strategy and allocate a team to implement the findings.
In step 4, you created a priority list for each task and in this step, it’s time to put everything into action.
I recommend you create a strategy for each department. For example, if the majority of tasks are related to sales, you can allocate them to the sales team.
If you do not have a team to implement the findings, you can delegate the work to an agency.
Step 6: Reevaluate Or Revisit Your SWOT Chart Regularly
After finding the strengths, weaknesses, opportunities, and threats of your business and implementing the findings, you should reevaluate and revisit your SWOT periodically.
I know now you will ask: How often shall I perform a SWOT analysis?
I recommend performing a SWOT analysis every 6 months to a year.
You should also perform a SWOT analysis before you introduce any new products or services, if there are changes to your internal teams like you add a new department or you hire a marketing director, or when big changes are coming to the industry.
Conclusion
A SWOT analysis provides insights into the internal strengths and weaknesses that can be leveraged or improved, as well as the external opportunities and threats that need to be considered and responded to.
This analysis aids in strategic decision-making, identifying areas for improvement, capitalizing on strengths, and mitigating potential risks.
Now, I am curious to know how often will you perform a SWOT analysis for your business.
Will you perform it every 6 months?
Or
Will you perform it every 12 months?
Either way, let me know in the comments box below.
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