"It is impossible to accurately map out a small business’s future without first evaluating it from all angles, which includes an exhaustive look at all internal and external resources and threats. A SWOT accomplishes this in four straightforward steps that even rookie business owners can understand and embrace."
Most organizations create strategic plans, but after a few months they are slowly forgotten – until the next fiscal year when the cycle repeats itself, over and over. Not only is this a waste of valuable time and money, but ignoring your plan can have disastrous consequences. I don’t have a statistic, but I do wonder how many businesses had “crisis plan for a global pandemic or natural disaster” in their strategic plan for years but never got around to creating it. You can’t plan for everything, but by using the knowledge you and your team already have, you can create a working plan that will allow you to roll with the punches.
That’s where a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis can be extremely helpful. SWOT is a business analysis tool that helps you identify both helpful and harmful elements from inside and outside of your organization. You can use this type of strategic analysis to investigate how your organization compares to competitors or complete market research. A regular examination of your business practices is crucial to the success of your business and ensures that you are operating efficiently and achieving your goals while staying aware of potential problems and opportunities.
You may think that this is a lot of work for a plan, but check out the following statistics:
- A recent study from PricewaterhouseCoopers reviewed 10,640 projects from 200 companies in 30 countries. The companies were from a variety of industries. They found that only 2.5 percent of these companies completed 100 percent of their projects.
- Harvard Business Review published a study analyzing 1,472 IT projects. While the average cost overrun was 27 percent, one in six had cost overruns of an average of 200 percent and a schedule overrun average of nearly 70 percent.
- Don’t forget extremely large public projects that cost nearly double their original estimate. You know them, they make the news: Three Gorges Dam in China, Boston’s “Big Dig,” Europe’s Channel Tunnel (aka “The Chunnel”), and North Korea’s Ryugyong Hotel are a few examples.
What are the basics of SWOT?
The SWOT chart above organizes the information in a way that it is easy to understand. The left column records elements helpful to your organization, while the right one records harmful elements. In addition, the top row captures elements that are part of your internal structure or culture, while the bottom row captures elements that are external to your organization. Let’s explore these quadrants in more detail.
Strengths
Listing your strengths helps you understand what is working for you. You can use your strengths in areas that might need more support. General examples are strong brand recognition, loyal customers, or unique technology. Some questions to ask yourselves while analyzing your strengths include:
- What do we do best, or what do we do well?
- What sets us apart from similar organizations?
- What does our audience/customer base like best about us?
- Where do we beat our competition?
Example: We have a loyal customer base; 90 percent are repeat customers.
Weaknesses
These are internal projects that are underperforming. It’s best to analyze your strengths first, as that will give you a baseline of success. You must identify weaknesses so you can determine what improvement looks like. These could include carrying a high debt load, weak brand recognition, or high staff turnover. Ask yourselves the following questions:
- What projects are underperforming? Why?
- What can be improved?
- What resources are available to help us improve?
- How do we perform against the competition?
Example: Most of the complaints we get are about long wait times for the help desk.
Opportunities
You can determine opportunities in a few ways, including processes you want to improve, and areas not already addressed in Strengths and Weaknesses. These can include tax cuts, favorable new rules in additional markets, or a competitor selling their business. Questions that can help you determine opportunities include:
- What resources do we need to improve our weaknesses?
- Are there gaps in our services?
- What are our annual business goals?
- What does our competition offer?
Example: Your biggest competitor is selling their business, and they told you before going public.
Threats
These are external changes, not within your control, that can negatively affect your business (e.g., natural disasters, a market downturn, or additional competition.) Ask yourselves:
- Where is there potential for problems?
- What changes in our industry are concerning?
- What new market trends do we see coming down the road?
- Where do our competitors perform better than us?
Example: Due to a major earthquake, your supply chain has been almost completely cut off.
When should I use SWOT?
Any time is a good time to employ a SWOT analysis, but particularly when:
- Your business or industry is dealing with a sudden and unexpected crisis
- Exploring new initiatives
- Revamping internal policies
- Considering opportunities to alter a plan midway through its execution
- Checking your industry to learn how you can improve operations as needed
- Determining where you are performing well and where your business operations need adjustment
The Covid-19 lockdowns caused hardships for many companies, but opportunities for others. The business model for organizations had to change almost literally overnight if they were to stay viable. Companies of all sizes around the world strategized to maintain success, or to just stay open. Some found that opening themselves to new ways of thinking about how to serve their clients and customers has made them stronger than before. A SWOT analysis during times of instability gives structure to a re-examination of how business is conducted, and changes needed to keep up with the “new normal.”
What do I need?
- A facilitator who will guide your team in filling out each section (It is best to have someone who is not part of the department currently affected by the problem you are trying to address)
- Stakeholders from every area being affected by the problem you are trying to address
- A time/place where you will meet (online or in person)
Instructions
- Gather all the stakeholders in a place where they can begin sharing ideas.
- Decide what the goal of your SWOT analysis is. Are you conducting market research in preparation for a new product launch? Are you trying to do some business restructuring?
- Have people begin sharing ideas.
- Have the facilitator begin filling in sections as people share ideas. (If there is a disagreement regarding where items fit on the template, write it in the notes and return to it later).
- Keep going, at least until each section has some content in it and everyone has had a chance to speak.
Of course, you will not see any changes if you don’t act on the discoveries found through your SWOT analysis. Rearrange the information to identify strategic changes to pursue and incorporate them into your strategic plan. Use the questions developed by Heinz Weihrich in the TOWS framework, an extension of the SWOT analysis, to determine next steps:
- How can we use our strengths to take advantage of the biggest opportunities available?
- How can we use our strengths to overcome our biggest threats?
- What actions do we need to take to overcome our weaknesses?
- How can we minimize our weaknesses so that we can better handle our threats?
Now you have what you need to determine where you need to change course. You can use this information to create your business goals, the steps needed to achieve those goals, and when you want to achieve them.
Final Thoughts
Understanding your business plan and your competitors is crucial for a successful business. Your plan is a living document that needs to an update more than every few years. A SWOT analysis helps organizations fully understand all the factors they need to know to make important business decisions. Don’t wait for a major financial crisis, natural disaster, or any other sudden problem to examine your plan. Conduct an analysis today so that you can more easily pivot tomorrow.
Developing a SWOT analysis can be difficult when deadlines are screaming and your team already has too much on their plates. MATC can help! Contact us to learn how!
Resources
“An Introduction to the TOWS matrix: Putting SWOT into action.” Accessed 2/9/23. https://www.professionalacademy.com/blogs/an-introduction-to-the-tows-matrix-putting-swot-into-action/
Hardy-Vallee, Benoit. “The Cost of Bad Project Management.” Gallup.com. 2/7/12. Accessed 5/21/23. https://news.gallup.com/businessjournal/152429/cost-bad-project-management.aspx
Leigh, D. (2009) “Chapter 5: SWOT analysis.” Watkins, R., & Leigh, D. (Eds.). (2010). Handbook of improving performance in the workplace (1 ed. Vol. 2 – Selecting and implementing performance interventions) (pp. 115-137). San Francisco, CA. Pfeiffer. http://boisestate.eblib.com/patron/FullRecord.aspx?p=468975
Raeburn, Alicia. “SWOT analysis: What it is and how to use it (with examples).” Asana.com. 11/28/22. Accessed 5/31/23. https://asana.com/resources/swot-analysis
Schooley, Skye. “SWOT Analysis: What It Is and When to Use It.” 2/2/23. Accessed 2/9/23. https://www.businessnewsdaily.com/4245-swot-analysis.html
