In any realm of industry, there are methods used to calculate the success rate of a problem or project. These techniques are proven procedures to determine the probability of a project being a success or a failure. In Science, you have research study to conduct; In Law, you have ca studies; while in Math, you have problem solving. These are all processes that allow you to identify how likely it is for you to succeed in a certain topic within its corresponding field.
It is imperative to see the capabilities and limitations of your business as it gives you an overview of your advantages and areas to work on. This enables you to build a right approach towards on how you will put a leverage on your business and advance from the rest of your competitors. From this point of view, you can create strategies that allows your business model to be in its utmost performing state.
Without these formulated procedures, you will not be able to learn the areas that you must improve on and eventually, the opportunities will just pass by you. A series of possible outcomes from these events may occur such as wasted efforts and resources, misuse if assets, limited to no progress, or worse failure.
In the field of business, there is a structured system that helps companies and businesses to evaluate its potential and its success ratio. This is called the SWOT analysis. Scroll down below to find out what is SWOT analysis, its importance, and how you can use the same system for your business.
What is SWOT analysis?
SWOT analysis is a diagram that guides you to breakdown and define your Strengths, Weaknesses, Opportunities, and Threats in your business. This is a framework that can be done by any individual or organization who wants to assess their performance and how close it is to their business goal projections.
Conducting a SWOT analysis for your company is a crucial step that must be taken regularly. If you want to develop your business and further rectify its weak points, this list will help you achieve that. It also allows you to check your total business performance from time to time hence giving you the chance to review and implement changes that will enhance your company’s development. The beauty of creating a SWOT analysis is that it provides you a new perspective on how to look at your business. It allows you to carefully identify your standpoint in your field and look at other directions that may affect your growth. The important role that SWOT analysis portray is that it provides a comparative study of what hinders you to go from where your business is to where you would like it to be.
Now that we have covered the definition of SWOT analysis and the importance of its role in building a business, let us move on to how you can apply this to your own company. Together with our expertise built from decades of experience in finding and providing business solutions, you will be able to successfully use this solid framework to your advantage.
The guide in creating a SWOT analysis.
Conducting this analysis is simply listing out the factors that make up the SWOT of your business or the Strengths, Weaknesses, Opportunities, and Threats. Here are the steps on how you can perform this.
1. Determine your goal – The first step towards business success is to determine the goal you want to achieve. What is your objective that you want to attain? What is your target that you want to reach? What event will define your success in business? These are some of the questions you can ask yourself in order for you to identify your desires that you want to meet at the end of your business plan. Failure to execute this step restrains you to complete your SWOT analysis and negatively impacts the outcome you are eyeing to fulfill.
2. Research – Now that you have identified your goal, you have to conduct thorough research about the industry you are to take. Gather information about existing competitors and right market for your business. Collect data that will help you to gain knowledge about the kind of business you want to engage in. Through the compilation of these details, it allows you to create a specific positioning for your business.
3. Strengths – Once you have finished contemplating on the first two steps, you must now start to work on the strengths of your business. Ask questions that will define the initial positive attributes of your business such as “What is your current advantage from the rest of the competition? , “What makes your products/services stand out that will draw your target audience towards you?”, “What characteristics, tools and resources do you have that will make you reach your goals?”or “What key areas can you perform well or best?. Your strengths must be clear so that you will be able to accomplish the next step.
4. Weaknesses – These are qualities that have to be polished. In other words, your weaknesses are the traits that you cannot perpetrate well. It is important to give attention to your weaknesses as these will uncover the areas that you lack skill in. Ask questions like “what are your limitations?” or “What are the characteristics that your competitors have that you do not?”. Identifying your weak points will improve your business so do not be afraid to admit them.
5. Opportunities – These are external factors that may provide you and your business a chance to grow. The list of opportunities you should include are the things that can contribute to your success. It can be growth opportunity in sales, operation system, resources, or tools. Think ahead about the potential events, possibilities or openings that allow you to explore for the betterment of your company and the things that you can take advantage on to lead the market.
6. Threats – Items that you should be listed in this category are the things that puts your business in a poor spot. These are factors outside and inside of your organization that may cause harm to your performance. Threats are detrimental to your company so it is essential to identify these in advance and anticipate so you can prepare ahead of time the appropriate strategies to implement thus minimize its negative effect to your company. To determine kinds of threats, you must conduct competitive checks to know the updates on what your competitors are working on right now, observe changes in the market behavior that may damage your standing.
7. Assess and Strategize – After completing the steps, you can now make your review and analysis base on the outcome of your study. Your assessment will be used as the foundation of the strategies that will compose in order to execute an effective business plan.
Sample SWOT analysis
To ensure that you are able to take a good grasp of how SWOT analysis work, below is an example of how to conduct this framework.
Per se you I am working on a start up company that sells dry shampoo which is also used as a disinfectant for the hair. Let us call the product “Roget”. Check out the steps below and how I applied the SWOT analysis:
- The goal is to sell 5,000 bottles of dry shampoo with disinfecting component and penetrate dry shampoo users in the state of Connecticut within the age range of 22 to 55 years old.
- According to my research, there is only 3 kinds of dry shampoo being sold in the state. 50 % of the market patronizes product A, 30% of the market patronizes product B, while the rest of the 20% patronizes product C. The gathered data shows me that there has been a shortage distribution of these products hence failing to supply for the demand of the market.
- There is no product that is exactly the same with Roget that is being distributed in the state.
- I have man power to sell Roget online and offline.
- Logistics is a problem.
- No contact with any manufacturing company.
- I do not have enough funds to cover the investment capital. Hence, I need to look for investors.
- Meeting new investors means new business opportunities.
- New product to introduce to the market.
- The added disinfectant component can make Roget lead the market.
- More established companies can boost marketing and advertising efforts to strengthen brand presence.
- Inconsistency in product formula.
- Limited cash flow can interrupt my business cycle.
7. Assess and Strategize
- With the solid gathered data that I have, strong point of strengths, weaknesses that can be easily resolved, vast opportunities that can create a powerful positive impact to my business, and manageable threats, my assessment is there is a 75% chance that I can meet my goals in 3 month time.
Building a business is similar to entering a battle. You should have all your tools prepared and anticipate potential problems that may occur so you come in ready with solutions. With the help of SWOT analysis, you can save yourself from the trouble of predicting what could happen and at the same time refrain from wasting efforts or resources. The SWOT analysis gives you a concrete guide on how you can maximize your strengths, improve your weak points, take advantage of your opportunities, surpass threats, and eventually meet your end goals.