Small Business Q & A: SWOT Analysis Is No Magic 8 Ball Business Articles | December 17 Women's Bernie Kosar Jersey , 2003 Q: A key investor in my business has ... that I hire a ... to do a SWOT Analysis to help plan for the future. I try not to argue with my ... but I'm not so sure I need to have this
Q: A key investor in my business has suggested that I hire a consultant to do a SWOT Analysis to help plan for the future. I try not to argue with my investors, but I'm not so sure I need to have this done. What do you think? -- Laurie B.
A: Laurie, before you call in the SWOT team to deal with this investor (sorry Austin Seibert Jersey , couldn't resist that one), let me tell you exactly what a SWOT Analysis is and how it can not only help you plan for the future, but get a gauge of how your business is doing today.
SWOT stands for Strengths Sheldrick Redwine Jersey , Weaknesses, Opportunities, and Threats. A SWOT Analysis is a written exercise that can help you clarify and focus on the specifics that make up the four areas that most affect your business. The purpose of a SWOT Analysis is to help you build on your business' strengths Sione Takitaki Jersey , minimize and correct the weaknesses, and take the greatest possible advantage of potential opportunities while formulating a plan to deal with potential threats.
Think of a SWOT Analysis as a checkup for your business. By spending a little time examining the internal and external factors that affect your business' health you can better gauge the present state of your business and identify things that may adversely affect your business' health in the future.
It's a good idea for every business to perform a SWOT Analysis on occasion, especially if you are doing strategic planning Greedy Williams Jersey , contemplating a change in direction or formulating new strategies for distribution, marketing and sales.
Should you hire a consultant to perform a SWOT Analysis for you? Speaking as a consultant who has been paid to perform SWOT Analyses for companies in the past, I can honestly (and yes David Njoku Jersey , without bias) say that depends on three factors: (1) the size of your company; (2) how in-depth the SWOT Analysis needs to be; and (3) how much of your investor's money you'd like to spend.
Larger corporations are most likely to hire professional firms to perform such analyses, primarily due to the complex nature of big business. Some corporate SWOT Analyses can run on for several hundred pages. Typically, a consultant will charge up to $100 or more per hour to perform a detailed corporate SWOT Analysis and most large companies consider this money well spent as a good SWOT Analysis can reveal otherwise ignored factors that might increase the company's bottom line or help avert future losses.
For a smaller business Myles Garrett Jersey , however, a professional SWOT Analysis can be an exercise in overkill. For your money you will get an impressive, detailed report that will make for great show at your next investor or board meeting and a wonderfully expensive door stop the rest of the time. I don't mean to belittle the value of a professional SWOT Analysis for small businesses. It's just that smaller companies can learn as much from their own efforts as that of an expensive consultant.
You can perform a simple SWOT Analysis with a #2 pencil and a fast food napkin Nick Chubb Jersey , but to get a truly accurate view of your company's SWOT factor I suggest you do things a bit more formally (and without the aid of condiments). I recommend that you involve all the key players in your business, including management, employees Denzel Ward Jersey , your attorney, accountant, even your spouse. My wife often gives me insights into my business just from listening to me talk at dinner. Sometimes we business owners and managers can't see the forest for the trees. It's good to have someone else point out things we might miss.
Here's how to perform a simple SWOT Analysis. On a piece of paper draw a vertical line down the center. Now draw a horizontal line through the center of the page. The paper is now divided into four quadrants. In the first quadrant (upper left) write the word "Strengths." In the quadrant next to that write "Weaknesses." Drop down to the second tier and label the first quadrant (lower left) "Opportunities" and the remaining quadrant "Threats."
Now just fill in each quadrant accordingly. Strengths and weaknesses are internal factors that affect your business. Opportunities and threats are the external factors. Let's look at a quick overview of each.
Strengths are those things that make your business stronger. Strengths might include: a product or service that sells well; an established customer base; a good reputation in the marketplace; a good track history; a high traffic location; strong management; qualified employees; ownership of patents and trademarks; and any other aspect that adds value to your business and makes it stand out from the competition. Strengths should always be gauged by the strengths of your competitors. If your business does something well just to keep up with the competition Baker Mayfield Jersey , it is not a strength. It is a necessity.
Weakness are the antitheses of strengths. Weaknesses are those areas in which your company does not perform well or could stand improvement. These are the areas of your business that make you susceptible to negative market forces and aggressive competitors. Weaknesses might include: poor management; employee problems; lack of marketing and sales expertise; lack of capital; bad location; poor products or services; damaged reputation; etc.
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