SWOT Analysis

One of the most important parts of a businesses strategic development yet it seems to be one which most consultants and strategies I've encountered fail to understand. Perhaps this is because SWOT has become too standardized, its an older tool, one which people pay lip service to by making a base list of strengths, weaknesses, opportunities and threats without stating what should be done about any of these.
If you learn nothing else from me, learn this: The purpose of a SWOT is not simply to list concerns or advantages; it’s to determine what to do about these things. Its to help you take advantage of opportunities, to develop strengths to help deal with weaknesses and avoid threats. A good SWOT tells you everything you need to be successful.
Again far too many strategic plans and worse--overpaid strategic planning consultants--end their SWOT analysis with nothing more than a short list of a few good and bad points about a company. This is one of the biggest mistakes I’ve encountered in the strategic plans I’ve seen.

Strengths: Strengths are relative to your competition. It’s not a strength if everyone is as good or better at it than you are. One of the primary goals in business is to develop a solid list of strengths in order to gain advantages. So don’t be too discouraged if your current list is short. You use your strengths in order to develop new strengths and to take advantage of opportunities. They are also a way of balancing weaknesses and avoiding threats. Write down some examples of how you might do this beside each listed strength.


Weaknesses: Is anything you do worse than the competition or which might derail your entire industry if everyone does it poorly? Depending on how serious a weakness is to your core purpose, you may need to determine how to improve upon it or how to adjust it.
You don’t need to be great at everything of course, you just need a plan to deal with your weaknesses in such a way that they don’t impact your business in such a way that it fails to earn as much money as it could.


Opportunities and Threats

Opportunities and threats come from anything that exists outside of your company’s reasonable control; from social movements to the political environment, the economy, new technologies, your competition and more can provide opportunities and threats.
Remember that in all things part of what you’re doing is comparing yourself to your competitors not to what you think provides advantages or disadvantages. If your customer base is changing, then there’s a good chance that your competitors’ customer base is changing as well. This in turn can provide both an opportunity and a threat because such changes give you the chance to adapt faster than your competitors, thus allowing you to take market share from them. At the same time, your competitors gain the same opportunity to adapt faster than you do. What you need to do is determine how you might take advantage of or avoid damage from your opportunities and your threats.

Part 1: Assess Current Strengths, Weaknesses, Opportunities and Threats

The reason strategic plans must be adaptable is that they are a reaction to the environment in which they exist, even if the intention of the plan is to change that environment. This means both that as the environment changes, which it will, so to must your plans. It also means that all plans must begin and be continually revised with an assessment of both the world around those executing the plans. It is difficult, however, to know exactly what is happening in any environment with absolute certainty. Indeed, one of the biggest challenges you’ll run into when beginning to develop a strategy is imperfect information. Many things are not public knowledge or even known by anyone. Your competitors will try to share as little as possible with you. Further, thousands of important studies haven’t been done, and as a small business you don’t always have the money to do them.

That said, it’s easier now than ever for you to gather the data you need. Websites, libraries, and more are all organized by computer systems so that you can find almost all human knowledge. Need to know what the average household spends on your product? The census probably has that statistic or it can be derived in other ways. The ease of gathering information means that the gap between those who’ve done their research and those who haven’t is wider now than ever among small businesses. So information is an edge that either you or your competitors will have. When all is said and done, only a few businesses will be wildly successful, and most will go out of business so you need every advantage you can get.