Ask The Expert featuring Adrian Ulsh
Q. Hi Adrian, I’m working with a new client that is facing multiple challenges in a variety of areas. Is it beneficial to do a SWOT Analysis on small businesses? If so, can you give me some tips on how to perform one effectively?
– Steve Jensen
I like to think of a SWOT Analysis as a “crystal ball” for a business. By that, I mean as a coach, will be able to look into the future, ask yourself a series of “if this, then what” questions, and from your responses put a plan into place to handle all future threats that may negatively impact your client’s business, while also identifying potential opportunities that could skyrocket their revenue and lead to unprecedented business growth.
SWOT stands for strengths, weaknesses, opportunities and threats. The SWOT Analysis helps you learn a process to tap into your full potential as a business owner, and leverage your business to its maximum potential.
It’s an in-depth examination of the internal and external factors that can influence the performance of your business, both now or in the future. Both you as the business owner and your business need to be analyzed in all four of these critical SWOT areas.
The information you will gain from performing a SWOT Analysis will prove pivotal as you begin developing a strategic plan for growing your business, and it often serves as the core foundational element for both your marketing plan and your financial plan.
Strengths and weaknesses are internal factors in your business. They should be considered from two distinct viewpoints. First, how they will impact you individually and second, how they will impact your business. From an individual perspective, this is referring to your own personal strengths and how, or IF, you capitalize on them. Let’s begin by discussing the various components of the SWOT Analysis to be sure you fully grasp what they are and how to identify them.
In SWOT, strengths and weaknesses are internal factors as they apply to both you and your business. For example,
A strength could be:
- Your marketing expertise
- A new, innovative product or service
- The location of your business
- Your quality processes and procedures
- Any other aspect of your business that adds value to your product or service
A weakness could be:
- A lack of marketing expertise
- Undifferentiated products or services, especially in relation to your competitors
- The location of your business, which in reality could be either a strength or a weakness
- Poor quality goods or services
- A damaged reputation
In SWOT, opportunities and threats are external factors as they apply to both you and your business. For example,
An opportunity could be:
- A developing market such as social media
- Mergers, joint ventures or strategic alliances
- Moving into new market segments that offer improved profits
- A new international market
- A market vacated by an ineffective competitor
A threat could be:
- A new competitor in your home market
- Price wars with competitors
- A competitor has a new, innovative product or service
- Competitors have superior access to channels of distribution
- Taxation is introduced or government regulations are levied on your product or service
Naturally, these are simply a few examples so you get the idea of how to define each area in your SWOT Analysis. There could be thousands of examples that apply to each of these categories. But let me interject a strong word of caution here.
A SWOT Analysis is very subjective. I have seen two partners who jointly own and run their business sit down at the same table at the same time and NOT list even one matching component in all four areas. That isn’t the point of a SWOT Analysis.
Instead, use it to get yourself thinking in future terms instead of present situations. Use it to create possible “if this, then what” scenarios. Use it as a guide, not a prescription. It’s a tool to help you look at what you and your business do well, and what you don’t do so well.
Once you define those areas, you can look ahead and extrapolate the potential damage your weaknesses may create, or how your strengths can be used to grow your business. You can begin to uncover the areas of opportunities that you may have never before considered. Joint ventures are one of the best ways for a business to grow, and yet very few business owners have any JV’s in place.
The same thing applies to threats. If you become aware of potential landmines to your business, you can begin to create a strategy to deal with them prior to them inflicting damage on your business.
So, here are some simple rules to follow when creating your own SWOT Analysis:
- Be realistic about the strengths and weaknesses of your organization
- Your SWOT Analysis should distinguish between where your business is at today vs. where you want it to be in the future.
- Use it in conjunction with your Gap Analysis
- Make sure your SWOT Analysis is highly specific & contains no gray areas or wording
- Always apply your SWOT Analysis in relation to your competition – are you better or worse than they are?
- Keep it short and simple, avoid complexity or over analysis
- Remember that it’s highly subjective and wide open to interpretation
These simple rules should help you create a SWOT Analysis that reveals your full potential as a business owner, and shows you the best ways to leverage your business to take it to its maximum potential.
About Adrian Ulsh
Adrian Ulsh is the CEO for Leader Publishing Worldwide, the largest online provider of coaching services worldwide. Adrian currently works with more than 500 coaches in 24 countries advising them on building 6 and 7 figure coaching practices.