Businesses of all types can benefit from a SWOT analysis. It is a simple but highly effective tool for companies to figure out how they’re faring compared to their competition. It can help business owners analyze their company from different perspectives and covers all angles. The result is a comprehensive study of the business that can be used to focus on core strengths and improve what is lacking.
However, SWOT analysis isn’t as easy as it sounds. Everyone from the C-suite employees to mid-tier management needs to be directly involved and give their input. For example, the CEO may think that the business is doing well on the customer service end. However, the business development manager would rather outsource the contact center to a BPO company like Telvista. So, all different opinions can be prudent for a more accurate and holistic SWOT analysis that benefits all stakeholders.
What Is a SWOT Analysis?
SWOT stands for strengths, weaknesses, opportunities, & threats. Before you consider doing a SWOT analysis for your company, you need to understand what it is.
The strengths and weaknesses of a company are internal metrics and can change with time and circumstances. However, usually, a company has complete control over these two factors. Your company’s strengths could be your location, service quality, your team, or intellectual property like patents. The same things could also be your weaknesses and SWOT analysis can help you analyze your situation.
Threats and opportunities are usually not something that the company can control but know about them can also be important for growth. Threats could be the competition coming up with something new or other things going on in the larger market. The price of raw materials, for example, is not something that you can change. But you can put practices in place to protect your company from the direct negative impact.
What Are the Benefits of SWOT Analysis?
A SWOT analysis can have many direct and indirect benefits for your business. If you are still on the fence about it, here are some benefits that you should consider.
1: Source of Information
You cannot keep a strict eye on the external and internal factors affecting your business without a SWOT analysis. It can help you collect enough information about your business to project your next quarter and make a strategic plan. A SWOT can help you make informed decisions and put the guesswork out of your business strategy.
2: Build on Strengths
SWOT helps you focus on the core strengths of your business and build around them. It can help you capitalize on the things that you do best. Businesses sometimes focus on other verticals that are not as profitable. A SWOT can help realign your focus to any untapped and ignored competencies of the business that may be your hidden strengths.
3: Audit and Analysis
It is one of the most effective tools for qualitative analysis and audit of any business front. After SWOT analysis, you can expect your business to focus on core competencies, reverse your weaknesses, and know what your competition is up to. Moreover, you can also maximize the potential of opportunities and help mitigate the effect of any threats.
Doing a SWOT Analysis – the Right Way
For a SWOT analysis to be effective, it is important that the company involves the founders, leaders, and customers. It won’t help much to outsource this task to someone who doesn’t understand the company just as well. Here are some tips to keep in mind:
1: Involve the Right Resources
Gathering the right mix of resources to recruit the best ideas can be conducive to developing a better strategy. The right SWOT analysis team should have reps from all departments so you can receive all perspectives.
An effective SWOT analysis meeting should avoid groupthink and ensure that all voices are heard. Everyone in the meeting can start off with a notepad and write whatever they are thinking. There are no right or wrong opinions and each has separate value. Throwing ideas on the wall can help businesses come up with more accurate observations.
3: Ask Questions
SWOT analysis is all about asking questions to yourself and your peers and drawing inspiration from the answers. You can ask questions like:
- Which business processes outshine the others?
- What can you do to streamline your processes even more?
- Are your employers happy?
- Do you think you have an edge over your competitors?
- Is your location ideal for the business?
- Does your team gel well together or are there communication gaps?
These questions can help you follow through the process of generating ideas and coming up with new solutions to existing problems. Many times, a question can point toward the gaping hole in your business management or marketing strategies.