Every New Year Deserves a Good SWOT

“I can do it!” With the New Year at hand, this optimistic mantra can be heard in healthclubs from coast to coast. But this attitude can easily stretch beyond barbells to boardrooms, where a fresh-start, can-do approach fosters success in annual business planning too. It’s the time of year to step back, open your mind, review yourself and your marketplace objectively, and be willing to alter your path to ensure it’s the most effective route to your goals.

In order to conduct this review it's useful to use a tool such as the SWOT analysis. A SWOT analysis takes into account your own business, your competitor's business, and the current business environment as as a whole. Specifically, a SWOT helps you examine your personal and organizational Strengths, Weaknesses, Opportunities, and Threats. You'll identify what worked and was profitable this past year, what was inefficient or futile, what your competitors have done (successfully or otherwise), and what opportunities the market is currently presenting. A SWOT analysis entails comprehensive brainstorming—preferably undertaken by a small group of your most focused, business-savvy colleagues and friends.

Anatomy of a SWOT

Here’s closer look at the 4 SWOT categories and ideas for fleshing them out:

Strengths – Consider such points as the reputation or brand recognition of your firm, the unique qualities of your offering, and your internal efficiencies and cost containment abilities.

Weaknesses – Are you a bit shy or simply weak on business development? Is your business lacking resources or desirable skills? Take into account personal weaknesses as well as those of your firm.

Note: For both Strengths and Weaknesses, try to step out of your current role and look at your business from the outside, ideally with the viewpoint of a customer. Include not only what you offer, but also intangible value-adds such as your timely delivery, convenient location, fair price, and established guarantees. Scrutinize your weaknesses honestly—even if it hurts.

Opportunities – Think about the potential for market growth (both short- and long-term) be it through increased number of users, or increased purchase size of current users. Consider how you can sell more product/services or simply make more money on what you currently sell.

Threats – These can be external or internal and often seem out of your control. Be continually watching your known competitors, but also be on alert for disruptive substitutions whereby a product or service seemingly unlike your own suddenly becomes a viable option for your customers.

Note: When taking on the Opportunities and Threats, examine your marketplace by including the appropriate impact of demographics, competitive maneuvers, economic factors, regulations, end-user demand, and societal trends. Include all levels of the supply chain (suppliers, middlemen, your customers, your customer’s customers, etc.) and alternative channels of distribution for your product or service.

Let’s Give It a SWOT

Although the results can be far-reaching, the SWOT exercise is quite simple.

1. Take four sheets of paper, draw a line down the center of each
2. Label one sheet Strengths, one Weaknesses, one Opportunities, and one Threats
3. On each sheet, ponder the category in question, and fill the left side of the page with any ideas that come to mind for that page’s particular category
4. For each idea you have listed, find ways to take advantage of the Strengths and Opportunities, methods for overcoming your Weaknesses, and options for dodging environmental Threats (see example below)
5. List to the right the goals and actions you’ve generated for each idea. These goals and actions will ultimately help guide your business to greater success in 2004 and beyond.

Example of Effective SWOTing:

You may have noticed that some of your Threats are also showing up on your Opportunities page. This shouldn’t come as a surprise, for one of the objectives of the exercise is to turn each potential threat into an opportunity for growth. It may seem awkward at first, but this process should encourage the creativity and flexibility necessary to address industry change and to meet the needs of the market.

That’s SWOT It’s All About

Taking the results of your analysis, you can now use the awareness of your Strengths in your marketing message and sales pitch. By focusing on the most lucrative market Opportunities, you can stay focused and steer toward success. The Weaknesses and Threats you’ve identified will keep you on your toes, encouraging personal development and professional agility.

At the end of the day, the more you understand about the internal and external forces at work in your business environment, the better position you will be in to deliver what the customer wants. So, as the New Year encourages you to get off the couch, take a swing at doing a SWOT. See where it leads you in 2004. I won’t tell anyone if you never show up at the gym.

© 2003 Jill Toole, M.B.A.

More "Biz Expert" articles from the archives:
Meet Me at the Water Cooler: You Won't Believe What I Just Heard, by Jill Toole
Honing Your Business Plan, by Jill Toole
It Pays to Get Connected, by Jill Toole