Should I really perform a SWOT analysis?Every entrepreneur, ever…
This question is asked daily to us as business consultants and the answer is actually not that simple.
Every entrepreneur has at one stage probably had interaction with a SWOT analysis. Whether it was by doing one for their own business or seeing someone regularly perform it for their business or simply seeing someone throw theirs away (this happens more than you might think!).
The SWOT analysis has been a bone of contention since the day it was invented.
There are some people who believe that the acronym actually stands for a “Stupid Waste Of Time” and then there are those that swear by its effectiveness.
The idea of the SWOT analysis is that it must form a part of your strategic planning and it must actually be referred to regularly for it to be effective.
It is not supposed to be the start and end of your strategic planning process. It was never designed to be such. It is a strategy tool.
The basic SWOT analysis does, however, give you a cornerstone to your strategic planning.
For instance, if you have a particular strength in your industry, this will be highlighted in the SWOT matrix and you can then use it to counter your Weaknesses, exploit any Opportunities or build on them to eliminate any Threats. (For the SWOT purists, yes I know this is not what you were taught the original meaning was, but why put it in a box when it can be so much more effective?!)
The SWOT analysis can be the start of your strategic planning process, guiding you to find the answers to your business’ future strategy. The most important questions it can help answer are:
- Should I continue to focus on my current industry/market or should I shift focus to another industry/market?
- Do my strengths provide me with a real competitive advantage over my competitors or do we all have the same strengths?
- Do the weaknesses in my business reduce my competitive advantage in the marketplace?
- Do I have the capabilities to exploit opportunities in the marketplace?
- Have my competitors eliminated the possible threats in the market place from their business?
It is important to realise that your business’ strategy can never be one-dimensional. It has to be dynamic.
Yes, there are certain aspects to your strategy that must remain fairly constant, but the marketplace changes daily. The wants and needs of customers change daily, what is an order winner today is an order qualifier tomorrow. Legislation changes every day, either causing possible threats to your business or creating new opportunities.
A SWOT analysis will help you see where the marketplace is changing, where your business is losing market share in terms of its weaknesses and where new opportunities might arise.
Here are a few important pointers to performing a SWOT analysis:
- Please do not perform it once and shelve it just to never be seen again.
- You must perform this analysis at least once a year and revisit the document monthly. Don’t forget about it!
- Collaborate with your staff, mentors, friends and family. They might think you have a strength that you don’t even know about or a weakness that you might ignore. Use all your resources!
- Prioritise each item under each group of the SWOT. Not all strengths, weaknesses, opportunities and threats were created equal. Discriminate between the points!
- Don’t only focus on the history of your business. Also, think of its future and how the different aspects of the SWOT will impact your business in the coming years. Think ahead!
- Remember that it is only a tool in the entire strategic planning process. It’s not the be-all and end-all.