Marketing tools for business #3
How many businesses do you know where they don’t seem to have a real appreciation of what their real strengths are? Businesses that seem intent on wasting their experience or long developed assets simply on a whim?
Here’s a business tool you can use to get a clear view of the factors which you need to take into account when developing the strategy and plans for your business.
It is an inevitable truth that, at times, running a business forces you to focus on the issues and fires burning today, not tomorrow. Understanding and learning how to apply a SWOT analysis to your business can help you position yourself ahead of your competitors and build on your strengths.
What is a SWOT Analysis?
SWOT simply stands for: Strengths, Weaknesses, Opportunities, and Threats. Each area forms a box on a grid and you consider each section to help formulate a business development or marketing strategy.
The Strengths and Weaknesses elements cause you to look at your business internally, at those things that you are good at and those where some attention may be needed.
Many businesses are great at looking inwards but fail to look outside their company. The Opportunities and Threats are external factors; focusing on the conditions of the world you operate in. The real benefit of a SWOT analysis is that it challenges you to see beyond your company walls to determine what opportunities are open for your company and how to capitalise on your strengths. At the same time it raises your awareness of where you might need to develop the skills, resources or capabilities of your business to meet your particular objectives.
While most of your analysis will be subjective, the SWOT can provide multiple benefits to your business. These benefits can include:
- insight into where your business can focus to grow
- an understanding of the market structure you compete in
- clear focus for your advertising and marketing on areas that give you a competitive advantage in the marketplace
- the chance to understand approaching problems or changes and respond proactively
To develop your own SWOT analysis, you need to evaluate each section with realism and by being specific. If you come up with the line “we are great at everything & have no competitors”, you are being neither objective nor honest!
You will be known by a specific “signature” to your customers in the marketplace – this will be a set of attributes or things that make them say “WOW” – or the opposite! So when you are evaluating your business, make sure that you look at any customer complaints for things like late shipments, errors or other customer issues. To effectively complete a SWOT for your organisation, look at the following examples:
Consider your strengths relative to your competitors and from your customers’ perspective. For example, all your competitors may sell using the telephone, whereas you use direct face-to-face selling. Anything a customer wants that you provide and your competitor doesn’t, can be a possible strength. It could be:
- business location or product exclusivity
- patents or proprietary goods
- an established distribution channel
- sector leading customer service or ease of returns
It is far easier writing down your corporate strengths than weaknesses. Think of objections your customers raise during the sales process. Think of your competitors’ remarks. Look carefully at any supply or service delivery errors (often referred to in distribution circles as “grief”). Be honest in assessing what truth there may be in what they say? It could be:
- limited or poorly trained human resources and staff
- errors in either product or service delivery – either in time or quality
- high cost of production or service delivery
- products or service similar (or inferior) to competitors’
Your business is influenced by the external environment, such as: legal, political, technological, and cultural factors. Evaluate all the things that you know which are changing or might change – and consider how this can be turned to your advantage – how might you react to such a change? It could be:
- government regulation changing in your favour
- development of or access to new technology
- growing trend and customer base
- new market sectors opening up
In a similar way, your business can be adversely impacted by external factors. Consider what can make your business obsolete, what will change the way you operate – and what will replace it. Threats can become opportunities or vice versa. It could be:
- new substitute products emerging
- price competition
- economic pressure
So, in summary, the SWOT analysis is a quick and simple tool to understand the big picture for your business in its chosen market. It is the starting point of strategic and business planning. Once you have a SWOT complete, you may want to develop it through more advanced analysis, such as Porter’s Five Forces model (see Marketing Theory #2).
The most important thing now is to apply this knowledge to your business – the only way any business makes progress is by taking considered action. Take all necessary actions to reduce the threats to your company, develop your strengths and work on improving your areas of weakness – thus positioning yourself to take advantage of the opportunities that WILL come your way!