Why You Need to Conduct Annual SWOT Analysis for Your Business
As a business owner or manager, it’s easy to get caught up in the daily operations of your organization, and losing sight of the top initiatives in the process. This means, when you hit an unexpected problem in the details, it can derail your entire day.
Proper planning can make sure that this is not the case, and this is where SWOT comes in.
The best way to begin your business planning is with a SWOT. It’s a simple way to stop getting bogged down in the day-to-day operations of a company, and then to step back, and consider every aspect of your business.
So, What is a SWOT?
A SWOT is a strategic review of the internal and external factors that impact an organization now or in the future – its strengths, weaknesses, opportunities, and threats. It’s sometimes called a SWOT Analysis or a SWOT Matrix. Either way, it’s a process that helps identify objectives and establish goals.
Strengths and weaknesses are usually internal and unique to a particular organization. A strength can be anything that gives the organization an advantage, while a weakness is anything that could be seen as a disadvantage.
Strengths and weaknesses are often found in the following areas:
- Buildings and infrastructure
- Finances and capital
- Products and services
Opportunities and threats are often external and may even relate to factors which affect society as a whole. An opportunity is anything the organization could exploit to its advantage, whether in the market or further afield.
Opportunities and threats include:
- The economy
- National events
Why Should I Create a SWOT?
Planning is hard. Creating a SWOT for your business is the best way to know your situation inside and out. For your business to succeed, you need to know what your strengths are. To make sure you don’t make mistakes, you need to know what your weaknesses are. It’s as simple as that.
This kind of analysis is also a great way to prepare for a new opportunity or a looming threat. Knowing what’s on the horizon lets you set goals and prepare for challenges. Without a SWOT to tell you about these external conditions, you might never know about them.
Additionally, a SWOT can help you identify a strategic fit in your industry. You can do this by aligning your strengths with opportunities in the marketplace. This is called Matching, and the best business strategists out there are always working on ways to help businesses match their strengths to their opportunities.
Another strategy you can use after doing a SWOT is Converting. With this strategy, you identify a threat and then work to turn it into an opportunity for your organization. For example, the rise of smartphones presented a threat to desktop software developers. But, the ones that utilized a SWOT saw the opportunity and began developing software specifically for phones. They converted the potential threat of a new platform into an opportunity for growth.
When Should I Create a SWOT?
If you’ve never carried out a SWOT for your business before, then you should put one into action as soon as possible. Understanding your business’s strengths and weaknesses is always helpful. Plus, it’s important to know about new opportunities in your industry and potential threats from legislation or competition.
It’s also a good idea to do a SWOT before you start a new business. A SWOT can help you identify a need in an industry that your new business could exploit. It can also help you avoid potential threats in your field, or it might even lead to you rethinking your entire strategy for the better.
A SWOT is a great way to help your company solve a problem. It can lead you to identify new ways to grow your business and it’s a great way to plan for a change in direction.
We recommend performing a SWOT every year. It helps your company plan for the upcoming year, look back at past accomplishments, and set new goals. Plus, it ensures everyone on your team knows your business and industry as well as they should.
How Do I Create a SWOT?
The first step in doing a SWOT is simply deciding that you need one. Once you’ve got buy-in from your organization, you need to bring in the right people. Try to include stakeholders from all over your organization, not just the people at the top.
Buy as many sticky notes as you can and book your biggest conference room. Once you’ve got everyone in the room, start with a quick explanation of a SWOT and why you’re doing one. Then get everyone brainstorming on your organization’s strengths, weaknesses, opportunities, and threats. Don’t analyze or shoot down any ideas at this stage, just try to put up as many sticky notes as possible.
After brainstorming, build a SWOT matrix and add every idea to its respective place. Discuss each one in detail to determine whether it belongs in a different quadrant, needs to be changed, or should be cut. After you’ve finished, convert your notes into a formal SWOT Analysis.
Once it’s complete, share it with everyone. You can use it to plan for the next year, discuss a new strategy, or convert a threat into an opportunity. Your SWOT is now a great reference for everyone in your organization.