In today’s extremely competitive environment, it’s vital for small businesses to find every advantage and opportunity possible. One of the most efficient and effective ways to find and develop business opportunities is by utilizing a SWOT Analysis.
What is a SWOT Analysis? It breaks down into four distinct categories:
As you work through each category, you will gain a better understanding of what you do well, and what you can do even better. If you are interested in learning more about the SWOT analysis, and how to implement it for your business, this article is for you.
How can you develop opportunities using a SWOT analysis?
Having a clear understanding of where you succeed and where you can improve has a two-fold impact: it prevents you from changing things that are already working and clearly illustrates the areas of your business that can be better. In this section, we will dissect each category of the SWOT analysis, how to ask the proper questions in each category, and how to unlock those precious opportunities that can help your business.
Finding your strengths is one of the easiest parts of the SWOT analysis. Here are some example questions to ask yourself or look into regarding your company’s strengths:
• What do our best reviews and customers say they love about our business?
• Which service/product do we provide that produce the most sales or most profit?
• Why do our customers choose us over our competitors (especially competitors who charge less for similar service)?
• What advantages do you possess that will ensure your business lasts for years to come?
As is the case with every category, it’s essential that you write down or type each answer to these questions. Once you have your strengths figured out, it’s time to move on to weaknesses.
The weaknesses category holds the dual distinction of being the most vital and also the most difficult to complete honesty. In order for this SWOT analysis to be as useful as possible, your ego must be put aside and an objective perspective must be utilized. Here are a few questions to help you get started:
• What negative reviews have we received regarding our product or service?
• What aspects do our competitors do better that drives customers away from our business?
• Which products or services produce the least profit or go unnoticed?
• Where have we lost the most money in a given time period and why?
Once you complete this section, the bigger picture becomes clearer and if you’ve been honest about your company’s weaknesses. Now we can tackle the Opportunities category.
The first two categories are designed to illustrate where your business currently is and where it’s been. In the next two sections, you will plan and implement strategies to improve your company’s future. The following are some sample questions that will help you spot patterns that are actionable and will produce better results in the short- and long-run:
• Can our strengths be implemented in other markets without compromising our level of service?
• If there is a product or service that isn’t performing well, can it be tweaked or marketed differently to improve its appeal?
• Our long-time customers have been asking for __. If we give them what we want, will it attract other customers?
• We spent too much money on advertising in print publications with low conversion. Can we allocate those funds into online ads?
This list of questions can go on indefinitely, and each of them can be applied to small businesses of all sizes and a variety of different industries. However, before you implement any of these changes, we must first look at the potential downside.
No matter what industry you are in, developing business opportunities always comes with a potential risk. In this last category of the SWOT analysis, we will ask questions that will bring everything full circle:
• Will there be any large upfront costs that may require a Business Loan? If so, do we have enough cash flow to cover the loan?
• If we make a change in technology, will our customers reject it?
• Do our competitors already have a distinct advantage in a specific niche that will make it difficult to compete with them?
• Will changing our business model completely cripple our business?
As you can see, the toughest questions occur in the Threats category. However, this should not prevent you from taking advantage of specific opportunities, especially if there is empirical evidence that suggests a specific change will dramatically improve your business.
SWOT Analysis Summary
Every small business has strengths, weaknesses, and opportunities to improve their bottom line and customer experience, and the most effective way to find and develop business opportunities is through a SWOT Analysis. There are many instances that capitalizing on these opportunities requires an increase in capital, and we are here to help you with any of your business finance needs. If you would like to learn more about our financial services designed to help small businesses, feel free to Contact Us today.
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