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Effectively using SWOT analysis to improve your business

When considering business analysis fundamentals, one of the best places to start is with a SWOT analysis. Although many have heard of the term, it has become clichéd to such an extent that many businesses fail to apply or adequately benefit from it. SWOT (Strengths, Weaknesses, Opportunities and Threats) offers a holistic means of looking at your business and identifying methods of sustaining and improving it.  One of the main reasons it is still utilised and encouraged is because it is simple to formulate and communicate, yet is also immensely powerful in gaining critical business insight.

If you would like to take full advantage of SWOT for your business, you will need to be honest with yourself during this process.  It is crucial that you look at your business from a completely neutral standpoint.  Being in denial about your weaknesses or overplaying your strengths means you will not gain a truly accurate analysis of your business through the use of this technique.

Strengths and Weaknesses

This relates to the internal aspects of your business, and so you have control to change these.

  • Strengths relate to core competencies. You can consider where your company excels, its competitive advantages and so forth.
  • Weaknesses refer to limiting factors in the business. Start by looking at what your competitors are doing, that you are unable to, or where you fall short in production, resources and so on.  While it is imperative to concentrate on what distinguishes you for the better, knowledge of your weaker areas helps you to plug holes, and improve them in whatever way possible.

Ultimately, this information on strengths and weaknesses helps you assess where your business truly is at present and where you can make necessary adjustments.  They are basically facets of your business you can use to carefully look at, thereafter create appropriate goals, and use them along the way as measuring rods for success.

Opportunities and Threats

These are aspects of your business you do not have direct control over.

  • Opportunities are strategic openings in the industry or environment that one can capitalise on. For example, filling in a gap left by a competitor that has gone under, sourcing cheaper suppliers, capturing on momentum of upward trends in the industry as a whole, applying new legislation that’s beneficial such as tax breaks and so on.
  • Threats are risks that can hinder, limit, or delay one’s advancement. Threats can include macro factors like economic recession, industry concerns such as shortage of raw materials, price-competition from bigger competitors, unstable labour markets, loss of key staff members etc.

Whilst the SWOT analysis is a general model, just as each and every business differs so too will their individual analysis.  After the exercise is complete though, the most important aspect is to interpret the resulting notes and then make the necessary adjustments, preparations, implementations and so forth – all in the best interest of business growth.  Opportunities naturally have to be fully captured, threats effectively mitigated, while strengths and weaknesses must be understood for the purpose of positive change. As you forge forward in 2018 why not start with a fresh analysis and make the necessary changes, it’s certainly not too late.

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