Using SWOT Analysis for Business Insights
Today’s Episode of Grow For It focuses on using SWOT Analysis as a tool for identifying key business issues. It will also assist you in developing a roadmap to effectively deal with those issues.
Podcast Episode 3 Transcript: Welcome to Grow For It! This is a podcast for small business owners, managers and professionals. I’m Jim. My goal is to work in your head-space to help you:
– Remain focused on your vision,
– Setting the right goals and
– Implementing those key activities to help you move closer toward your vision.
A big topic for my clients right now, as well as in my own business, is strategizing for the upcoming year. I’m going to introduce you to a tool that can provide some valuable insights and structure to assist you in your planning and goal-setting.
The temptation many of us have is to simply start setting targets, before we really look around and see what’s actually going on in your market.
You might ask who’d do it that way, but trust me, it happens more than you think.
Before we begin, let’s talk about what we covered in the previous episode. We spent a lot of time differentiating between your Vision and Goals.
Goals are extremely tactical. Your execution and performance will lead you closer to your Vision. But what goals to you actually need to set?
Where should you really focus? We’ll begin to unpack that today.
A tool I’ve found to be extremely helpful is called a SWOT analysis. SWOT stands for STRENGTHS, WEAKNESESS, OPPORTUNITIES and THREATS.
It’s a tool to help you look for ways to begin taking what you know, and defining specific activities based on that knowledge.
Ultimately, what you want to accomplish is to identify specific strengths that will enable you to leverage opportunities and avoid (or minimize) threats.
A detailed assessment makes your goals and business planning easier to visualize. If you have a team, this tool can help you to achieve greater buy-in.
If you’re on your own, a SWOT analysis can help you identify ways you might be able to outmaneuver the big companies. Remember, aircraft carriers take much longer to turn than speed boats.
Are you ready to break it down? Well, you know what’s next…grab a sheet of paper.
I want you to draw a large square. Take up as much of the sheet as possible.
Next, draw a cross inside the square so you have 4 equal-sized, quadrants.
In the upper left corner, write Strengths. In the upper right corner write Weaknesses. In the lower left corner write Opportunities. And in the lower right corner write Threats.
Trace over that horizontal, center line a couple times to make it a little darker. As you look 4 quadrants, note that the upper 2 refer to INTERNAL factors. The lower 2 refer to EXTERNAL factors. That’ll become important in a minute.
As an aside, there’s a video excerpt from a seminar I gave on this topic, in August of 2015. If you’d like to watch it, and listen to an interesting reaction from the audience, just Google: SWOT ANALYSIS FOR LAW FIRMS. Don’t worry, this is a general business tool. It’s not just for law firms.
My video typically appears on the 1st page. You’ll either find my blog post which includes the video, or the actual video itself.
So let’s get back to our drawing. It’s time to begin filling in the quadrants.
Let’s begin with your Strengths, in the upper left quadrant.
Business strengths might include:
- Brand Awareness – people in your target market know your name.
- Functional Expertise – list what you do really well.
- Team or Talent – Do you have some rock stars on your team? (If not, this might be listed as an internal weakness)
- Fill in as many factors as you can capture. Try to be as specific as possible.
Now move to the upper right quadrant for Weaknesses.
Here are some potential considerations:
- If it’s been a tough year, you might list cash flow or cash reserves.
- If you’re a new business, or in a new territory, your initial marketing might not be well-established.
- Sometimes, the quadrant might include limitations in your technology, software or internal processes.
It’s important to be honest with yourself. Don’t look at this as a negative. It simply is what it is – at least for right now, right?
The next step is to move to the lower left quadrant, Opportunities. Keep in might, this is below the mid-line, so focus on Externalities.
- Depending on your type of business, the economy may present specific opportunities.
- Can you get more specific?
- Has a significant competitor recently gone out of business or left your market?
- Do you expect an upcoming legislative or regulatory changes that might open up a new market, sector or service opportunity?
Finally, we come to the lower right quadrant, external Threats.
- Are there rumors about a new competitive product or service threatening your market share or price point?
- Did a competitor recently higher new talent?
- Do you anticipate changes in the economy such as interest rates, regulations, etc?
These are just examples of factors to get you started. What SWOT helps you to do is to perform an “Environmental Scan.”
It’s something you should do annually, but you’ll actually be better prepared if you do this on a quarterly basis. You need to be nimble and flexible in your business activities.
If you can spot an Opportunity (or Threat) early, you might have time to outmaneuver your competition. Remember the aircraft carrier vs. speed boat point I mentioned at the beginning of this episode.
If you have a team, consider having them do a SWOT on their own or by department, then converging the data onto larger sheets. Alternatively, bring key members together for a group session.
One of the things GE did very well was to bring together cross-functional teams for what we called “work-out sessions.” Don’t just rely on your managers for this SWOT analysis. Involve your administrative staff, field sales people and junior associates. Each person interacts with a customer, suppliers, competitors and other parties that can impact your business.
As the leader of your organization, some of the feedback you typically receive has probably been, shall we say, “filtered.”
When you engage a cross-functional team, you might actually be surprised by their perspectives. More importantly, you might even learn something you didn’t know.
Years ago, I was the DIRECTOR OF SALES for a regional distributor. Our CEO used a technique that worked well with our team.
Once we’d captured ideas, factors, key thoughts, or other lists, he gave each of us a limited number of sticky dots. You’ve seen these in office supply stores or school supplies areas. They’re about the size of a nickel and come in assorted colors with an adhesive back.
Anyway, we’d individually stick our dots on the factors each person felt was the most important or vital to the process. We all did this at the same time. When we were finished, we’d step back and look for the largest groupings of dots. Then he’d ask one person to explain why he/she chose that item. The value was in the exchange of ideas. Sometimes, we’d change our dots based on someone else’s opinion – especially if it was something we’d hadn’t considered.
Once we settled on the dots, we counted up the largest groupings and those became the ones the team felt most committed to addressing. It was a great way to build consensus.
So your paper is full of notes. Your SWOT analysis has helped you to identify a wide range of factors. As I commented earlier, the final step is to begin looking for ways to use your STRENGHTS to leverage OPPORTUNITIES and minimize THREATS. It’s also highlighted specific WEAKNESSES to be addressed. You now have important insights that will be extremely helpful in developing your business goals.
I realize this episode was a bit more “academic” that the previous episodes. However, as you move into business planning and goal setting you need solid information.
This SWOT analysis can definitely help.
Well, that brings us to the end of this episode. I hope you found it helpful. Thanks for listening. As always, I appreciate your time.
If you’d like more information, there are articles and videos about this and other techniques on my website, JimRayConsultingServices.com. Feel free to check them out.
Let’s connect via my business Facebook page, so we can keep in touch.
Finally, I’d sincerely appreciate it if you’d take a quick minute to leave a 5-star review for this podcast on iTunes. Those reviews really help to ensure others can find it.
If you’d like help working through a SWOT analysis, or facilitating a team meeting, I’m available to help. You can contact me via my website, just put the word “PODCAST” in the subject line. I’ll be happy to engage to help you and your team GROW FOR IT!