No plan is 100% perfect, and an essential factor of the long-term strategic planning for your organization is regular and ongoing evaluation of any plan you have put in place. Through that evaluation, you can get an overview of how different components of your strategy are working, which ones have been successful, which ones need to be changed or replaced, etc.
For project managers, SWOT is a crucial part of being able to manage project lifecycles. It can play one part in helping project managers to excel at virtual project management. For owners and general managers, it is an essential component of their long-term strategies, including how to improve any sales channel strategy.
The name we give to this analysis is SWOT (Strengths, Weaknesses, Opportunities, and Threats). It looks at all the different aspects of your plan from both an internal and external perspective to allow required changes to be planned and implemented. Knowing how to carry out a SWOT analysis efficiently can make a vast difference to your business.
What is a SWOT analysis, and when should we carry them out?
SWOT identifies the Strengths, Weaknesses, Opportunities, and Threats that either currently exist within your organization or which you have identified as factors in the future. A SWOT analysis allows you to maximize your strengths and opportunities and implement strategies to eliminate or reduce your weaknesses and threats.
Most often, a company will execute a SWOT analysis before starting a new chapter in their business, such as expansion or acquisition. They’re also carried out when planning to launch a new company to help with strategic planning. While there is no set rule for how often a SWOT should be carried out, doing one every 6 months or so is recommended.
SWOT analysis allows you to make the most of what you have and how you use it and it can help reduce the likelihood of failure (in any component of your business). It identifies potential hazards that may arise (such as a break in your supply chain), and it can also enable you to build a strategy that makes you stand out from your competitors.
It can also aid your marketing teams to understand what to do next and how to improve their current strategy. In fact, SWOT offers benefits to almost every area of your business.
How to execute a SWOT analysis
While this may sound self-explanatory, you need to look at all strengths across your organization. It may be the case that a strength in one area can affect other areas of your business, so you want as broad an overview as possible. But in what areas, in particular, should you be looking for your strengths?
- Financial. Where do your main financial strengths lie? Do you have good liquidity? Is your business currently profitable? Would you class your business as being solvent and able to meet any debt and other payments? What are the key drivers for your revenue and cash flow?
- Customers. The primary driver of your business so a crucial factor in SWOT. Do you have customer growth, and if so, where is it coming from? Why do your customers choose to do business with you? Great products, prices, customer service? What is your NPS (net promoter score), and do you have good reviews online and on social media?
- Internal. How well do you function as an organization? Are your employees satisfied, and do you have a high retention rate? Is your current structure scalable if you wanted to expand? What makes you function well as a company? How good is your enterprise network security? Is the software you use for things like collaboration chat effective?
- Growth & Learning. What factors contribute to your growth? Do you have good employee development programs that nurture and reward staff? Do you offer good salary levels that encourage retention? How positive is your company culture as a whole?
Making a list of these strengths gives you a solid foundation for moving forward with your analysis. These make your company work well and may also aid you later in countering both weaknesses and threats. But there may also be room for improvement, so consider ways in which you can make these strengths yet stronger.
Your weaknesses cover two main areas for you to consider: What things are you not good at? And what areas could you work on to improve significantly? Knowing your weaknesses and implementing plans to counter them or to reduce their effects can be one of the main outcomes from your SWOT analysis And you simply apply the same criteria as with strengths:
- Financial. Are there any major financial weaknesses? Has your market share suffered due to new competitors? Are there seasonal fluctuations in your cash flow & revenue that may have a negative effect?
- Customers. Do negative reviews or a low NPS identify areas where you can improve the customer experience and journey? Do you experience high bounce rates on your website that also reflect this? Are there things you can do to improve your customer retention rate? Is the way you sell products holding you back?
- Internal. Are there any serious issues with your company structure or culture? Are you experiencing low employee retention? Does your customer service team deal with inquiries too slowly, or do they have other problems? Are you using the best tools available to teleconference – teleconferencing services – join or host meetings anytime, anywhere?
- Growth & Learning. Do you have poor or non-existent employee development programs? Do employees find it hard to advance within your company structure? What do employee surveys tell you about your staff’s perception of your culture, your reward structure, their overall experience?
These first two areas (strengths and weaknesses) will identify key comparable factors that can help you spot quickly what you do well and what you need to do better. These factors are exerting current, and potential future, influence on your business, your customers, your revenue streams, etc.
A good business is always looking to the future and, in particular, for new possibilities and opportunities that will benefit your organization. Identifying opportunities you can use to your advantage will be a crucial factor in strategic planning. Major opportunities may require major changes, such as scaling up or expanding your workforce.
- Financial. Such opportunities could cover a wide variety of factors. These could include acquiring a competitor cheaply due to them experiencing financial issues, accessing low interest loans to fund expansion, switching suppliers to lower costs, or adopting new technology for this purpose.
- Customers. What opportunities do you have to improve how you interact with customers or to improve their overall experience? This is not just about identifying how to increase your customer base but how to improve its perception of you. What can you do not only to meet current sales goals but also to exceed them?
- Internal. Are there opportunities to improve your internal processes and systems that will serve you well in the future and impact other areas? For example, you could choose to take up green initiatives, such as using recycled materials for packaging or drastically reducing your usage of single-use plastic. As customers become more environmentally aware, these can be important decisions.
- Growth & Learning. Can you identify opportunities to improve your company culture and for your staff to grow and learn? These could be as varied as offering training in other areas or sponsoring educational courses that teach employees new technologies or systems. And could you implement tools such as free meeting software that benefits staff who work on-site or remotely?
Just as strengths and weaknesses can be paired, so can opportunities and threats. While opportunities offer chances to improve areas of your business, threats pose potential dangers. Identifying these in advance can allow you to make plans to mitigate their impact.
- Financial. These could come from many different directions. For example, if you do business internationally, a poor dollar exchange rate could affect your profitability. Or if a new competitor enters the market at significantly lower prices, this could have a serious effect on your margins.
- Customers. Are there threats to your existing customer base or a threat that could affect your ability to attract new customers? Could a competitor take customers away from you because of better service or discounts? It could even be a new product that outperforms what you already offer and will result in reduced customers for your product.
- Internal. Threats from within can often be an issue. These could include potential labor disputes, which may affect your ability to do business. Or is a competitor or similar company looking to acquire your business or make a hostile takeover? Are there issues with collaboration that may have negative effects in the future, and can you learn how to improve marketing team collaboration?
- Growth & Learning. Is there anything on the horizon that may affect these areas of your business? This could include something like resistance to your organization adopting new technology or machinery. It could also forecast staff departures due to retirement or other reasons.
Done correctly, SWOT is an integral part of both future planning and making adjustments to any current strategy. It can help you identify if you need to adopt any new tools to assist with project management and other areas. Indeed it can play a major role in effective agile project management.
Playing to your strengths and working on your weaknesses has always been important to how we do business. But a good SWOT analysis can give more detailed views of the good and the bad within our organizations and identify the challenges and opportunities we may face in the future.