Learn your SWOT analysis

SWOT analysis is a simple but very useful technique that you can use to help identify your business strengths, weaknesses, opportunities and threats.

As an entrepreneur you need to understand where to invest, when to invest and conduct a proper analysis of the business trends. To do so you need to study and understand both the internal and external environment the business operates in.

It helps you identify the internal and external factors that are favorable or unfavorable to your business even as you seek to achieve your business objectives.

It also helps you identify which objectives can or cannot be reached.

As a result you can prioritize your business objectives and focus on only what is achievable.

Your business can develop long lasting strategies by making use strengths and opportunities to distinguish itself from its competitors in the market place.

At the same time, your business can find innovative ways to overcome its weaknesses and threats or convert them into strengths and opportunities that it can exploit and make positive use of.

Strengths

Strengths are characteristics of your business that if exploited gives your business an advantage over others in the market.

These are internal to your business.

Questions you should ask yourself here include:

What can you do better that everyone else?

What makes your business different and unique in the market?

How high are your overhead costs?

What can help you lower your operation costs?

What business processes do you have that are useful?

What other advantages do you have over your competitors?

How fast can you respond to change?

What assets are in your team such as experience, skills and education, networking and reputation?

What other assets do you have such as copyrights, patent, machinery and equipment?

Weaknesses

Weaknesses are characteristics of your business that put it at a disadvantage over others in the market.

These are also internal to your business.

Questions you should ask yourself here include:

What factors make you lose on sales?

What do you need to avoid?

What do you need to improve on?

Are there processes you need to improve on?

What do you need to be competitive and remain competitive?

What do customers say you need to improve on?

What is your business reputation in the market?

What is your market presence?

How reliable is your staff?

Is there a weak link in your team?

What is your cash flow position?

How motivated is your staff?

How profitable is your customer base?

Internal characteristics within your business include:

The location – how close or far is your business from its customers or raw materials?

Finance – how much does your business have to spend on its operations, wages, acquiring equipment and other overhead costs?

Staff – their numbers, skills, experiences and education levels

Processes – are your processes efficient, effective, automated or manual and easily understandable?

Quality of products produced

Ease of use of products produced

Your cost of production and operations

Your business reputation in the market

Communication – how effective are your communication channels? Both amongst staff and with your customers.

Opportunities

Opportunities are factors present in the environment that your business can exploit and use to gain an advantage in the market.

These are external to your business.

Questions you should ask yourself here include:

What in the environment can you spot as opportunities you can take advantage of?

What trends can you spot?

Is your business sector expanding?

Is your market expanding?

Is the government encouraging business growth in the country?

What laws and policies are there?

Are there changes in regulations?

What is the local and national economic situation?

What do your customers think about your business, product and brand?

Threats

Threats are factors present in the environment that can damage your business.

These are also external to your business.

Questions you should ask yourself here include:

Who are your competitors?

What are your competitors doing?

What changes are there in technology?

Are your competitors embracing the new technology and how fast?

External factors affecting your business include:

Trends – both local and international

Demography – including the population shifts, age, gender, traditions, religion, culture, attitude and lifestyles of the community and society the business operates in

Legal requirements – the obligations of your business set by the law

The economy – both national and international, changes in interest rates and exchange rates

Technology – including developments and changes in technology

Politics and government – changes in leadership and taxation

Ease of market entry

Competitors – their numbers, ease of entrance into and exit from the market

Supplier costs and reliability to supply on time

Labor turnover

Customer dissatisfaction

Market demand

Changes in consumer behavior

Production disruption

Present and future systems and technology

Finally, here are ten steps to conducting a perfect SWOT analysis:

Step one: Clearly state out the objectives of your SWOT analysis.

Step two: Study your internal and external business environments.

Step three: Prepare your SWOT analysis chart.

Step four: List down your strengths.

Step five: List down your weaknesses.

Step six: List down your opportunities.

Step seven: List down your threats.

Step eight: Check your analysis.

Step nine: Develop your long term business strategy.

Step ten: Prioritize your strategic objectives.

Cheers,

Peter Kirimi Mburugu.

Please subscribe, like, leave a comment and share.

Read exciting, insighting and latest articles under: All Features