© Vinny Ribas
It is all too easy to get so caught up in the day-to-day operations of our businesses that we lose track of our goals and our progress towards them. It is also common that we get so busy running the business that we don’t take the time to take a hard look at the big picture. As the business owner, it is important to always know what is going right and what’s going wrong in your business. You should be completely aware of why are you growing (or not growing) at your current pace. You should have one eye on your competition at all times. You should be looking for ways to fix problems in your industry or that your customers have. You can take advantage of challenges and turn them into huge profit centers for your business if you learn to listen to what others are complaining about.
One of the most common tools that business owners and strategic planners use is called the SWOT Analysis. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. By simply listing what each of these are as it relates to your business and its performance every 3 months or so, you can insure that you keep doing the right things and continuously fix the things that are wrong. You will also recognize trends that you can either lead or ride. Lastly, you can ward off potentially serious problems.
I strongly suggest that you bring your entire executive team together to perform this evaluation. Everyone has a different perspective, so the things that you see as strengths may actually be seen as weaknesses by the rest of your team, and vice versa. It’s important to have everyone’s thoughts and input in order to see a true picture of your business as it is at this very moment. And each time you list an item, next to it include an action item. For example, explain how you can capitalize on each strength, overcome or mitigate each weakness, take advantage of each opportunity, and nullify or minimize each threat.
Here is a closer look at why each of these components is important:
- Strengths: Make a list of all of the things that make your company strong. Include key personnel, your capital position (if you are adequately capitalized), your geographic location, your reputation, your market penetration, your successful marketing campaign etc. Don’t leave anything out. Once you’ve done this, you’ll know what you need to keep doing. You’ll know who you need to reward or protect. You’ll know where you need to continue marketing or what might possibly the focus of your next marketing campaign. You’ll understand what is giving you an edge over your competition. You’ll also have a handle on why your customers buy from you, why your employees stay with you, and why you have a lot to look forward to!
- Weaknesses: Make a list of all of the things that weaken your business. Include under-performing employees, location, lack of capital, holes in your executive team, unreliable vendors, an ineffective marketing campaign and anything else that you can think of. You may feel like you’ll never be done with this list because we all know there are so many things we’d like to change or improve. Doing this exercise alone may bring to light problems or challenges that, when fixed, can turn your entire business around. It may also uproot some serious situations, such as bad employee moral or poor customer service, that will take some hard work to reverse or repair. But once you’ve included all of the company’s obvious major weaknesses, you are positioned to develop a very productive and profitable to-do list for yourself and your team.
- Opportunities: Make a list of all of the opportunities that your business has to increase its profitability, market presence and/or reputation. These might include making facility or equipment improvements, entering new markets, finding new resources, developing strategic partnerships, hiring a key employee, accessing additional funding etc. The entire direction of your business, the introduction of a completely new product line or the chance to become the leader in a certain segment of your industry are all possible outcomes from this exercise. Take each item listed very seriously and watch your business transform for the better right before your eyes!
- Threats: List everything that is threatening the short and/or long-term success of the company. This could range from changing trends or increased competition to a lack of sufficient capital. Take a close look at the weaknesses you listed and determine what the outcome will be if you don’t find a way to turn them around, because these are also threats. Are you at risk of losing employees? Is your lease about to expire or your rent about to increase? By acknowledging all of the things that can hurt or destroy your company or its progress, you can begin putting plans in place to thwart them. Once again, take each item very seriously. If it is big enough of a threat to put on this list, it’s big enough to command immediate attention!
Once you have completed this list, your next task is to prioritize the weaknesses and the threats you listed, then strategize on ways to reverse them. Also prioritize the opportunities you have so you can begin the process of taking advantage of them. At the same time, analyze your strengths so that you can develop ways to capitalize on them. You might even use this simple exercise to build an entire short-term strategic plan for your company.
Conducting a SWOT analysis for your business is a powerful process. But I highly recommend you take this a lot further. How you and your team perceive your company may be totally different than the way your customers do. Why not ask them to weigh in on what they think your strengths and weaknesses are. They just might surprise you.
And lastly, it can be very beneficial to conduct a SWOT analysis on your personal life as well. Have your closest friends and family give their input as well. This is all powerful for several reasons. For example, you may remember or discover traits about yourself that you hadn’t considered. You might find out that something you consider a strength, other see as a weakness – or vice versa.
By doing all of these exercises, you will always maintain an accurate picture of where you and your company stand, and you’ll always have a roadmap of how to improve your position.