A bright idea is the first step to making your business dreams a reality; however, don’t let that bright light blind you. Going into business without a solid plan in place only serves to hurt you in the long run. Plan, strategy—whatever you call it—it’s important to have one to ensure that your company is running smoothly. At McNutt & Partners, we use what is called SWOT analysis to not only assess our own company’s status, but to help our clients do the same. Follow along as we discuss using SWOT analysis to make smart business decisions.
What is SWOT?
No, we didn’t misspell “SWAT” (no flak jackets here). SWOT stands for Strengths, Weaknesses, Opportunities and Threats. The point of SWOT analysis is to guide business leaders in considering all of the factors involved in making a business decision. The decision could be to implement a new internal company initiative, to attempt a new strategy for obtaining leads, or even to edit an existing plan that has already been set in motion.
Using SWOT Analysis to Make Smart Business Decisions
In addition to implementing a specific action, SWOT can also be used as a means of making an overall assessment of a business itself—whether that business is still in the idea stage or has a longstanding reputation in the industry. Here, we’ll talk about how we use SWOT to help our clients assess what is and is not working in regard to their business models—and how that affects their business decisions.
“S” in SWOT stands for strengths—meaning what strengths does your business decision (or your business model as a whole) possess? Ask yourself—what problem am I trying to solve? What niche am I trying to fill? The strengths portion of the analysis is an internal factor, meaning that you already have access to the resources that affect those strengths (finances, experts/staff, location, etc.) Make a list of the strengths associated with your business, product or service.
Where there are strengths, there are weaknesses. Second in the acronym, weaknesses are also internal factors; however, these are the negative ones that threaten to detract from your strengths. Let’s say you have a new product you are trying to market. What are the barriers to doing so? What does your business need to do to be competitive? For example, do you need a patent? Say you are lacking in some of the areas mentioned in the strengths description above. If your weaknesses are lack of resources, for instance, note them here.
Switching gears from internal factors, SWOT’s “O” represents an external factor—opportunities. Here, you should identify variables in the business climate around you that can positively affect your initiatives. Is your product or service meeting a need that is currently in-demand in your respective market? Are industry regulations in a state of change that could give you a push in the right direction? This could even come down to answering the simple question—do your customers give you good feedback (considering you are already in business)? The economy, outside funding sources, and even environmental standards can all be factors that play into your opportunities. Outline your opportunities as part of your SWOT analysis.
Capping off our SWOT analysis is the “T,” which stands for threats. As the aggressor to your opportunities, you should consider threats in the same categories as we delineated above. Threats are also an external factor—so think about things you have no control over. Are competitors threatening to unseat you? Are your supply resources readily available? Does technology portend to make your product or service irrelevant? People other than you making decisions—from consumers to politicians—are the source of these potential threats. Take a minute and think about what factors are a threat to your success.
So, what now?
Now that you’ve collected the information, it’s time to turn it into action. Interpreting SWOT analysis has everything to do with determining how each of the categories relates to another. For example, use your internal strengths to figure out how to take advantage of your external opportunities. You can also employ your strengths to combat your external threats.
Don’t forget about your internal weaknesses. External opportunities may be able to address them. Also, ask yourself what actions you can take to keep your weaknesses from growing in the face of the threats you identified.
The overall goal
In using SWOT analysis to make smart business decisions, keep in mind that the overarching purpose is to form a business strategy that will ultimately set you up for success. At McNutt & Partners, we can help you consider that strategy from the marketing perspective. Read more about the components of an effective marketing strategy.
Need help? McNutt & Partners is a full-service advertising and digital marketing agency. Contact us today for your marketing needs! Call 334-521-1010, or visit our contact page.