It is the wish of every entrepreneur to start a successful business venture that will run for years with a sound reputation.
However, the success or failure of any business is highly influenced by the business environment (external or internal).
The external business environment comprises of external factors that affect the business performance while internal business environment refers to the internal factors that affect business performance from within.
As an entrepreneur, it is advisable to carry out regular business evaluation tests so as to determine the “health status” of your business venture. Such practices will help you make sound decisions in regards to your business future performance.
One of the best-proven techniques is conducting a SWOT Analysis as it cuts across both internal and external business environments. SWOT is an acronym that stands for Strength, Weaknesses, Opportunities, and Threats.
1. Evaluating your business Strength
Business strength refers to the unique features that make your business to stand out from the crowd. When you determine what makes your business the best choice, you can make better decisions of how to maintain the standards.
Do you have the best employees with the right qualifications? How good is your customer-care service? Do you produce high-quality products? Are you using the latest technology and machines to do business?
Such crucial questions are important as they will help you streamline your service delivery thus, giving you a competitive edge compared to other players in the market. It’s an internal business environment factor which can be controlled and regulated by the management team.
2. Assessment of business Weaknesses
Have you set realistic business goals but you are not achieving them? Maybe there are some internal issues that are hindering you from realizing your full potential. When you critically examine the factors that are pulling you down, you will be able to identify your business weaknesses.
Read Also; Can Your Business Pass The 3Ps Test?
Such issues may arise as a result of; Gaps in capabilities, reputation, presence and reach, financial, morale, commitment, leadership among others. Because it is not possible to genuinely discover your own weaknesses, it is always advisable that you hire an independent consultant who will give you non-biased weaknesses.
Once you discover your weak points, you will employ appropriate measures so as to improve business efficiency.
3. Unveiling new opportunities
SWOT analysis helps the business decision makers discover new opportunities in their area of operation. With the advancement in technology, new business opportunities keep on emerging every day.
Therefore, when you assess your business potential, you will be able to discover new methods of reaching new potential customers, increasing your product/service line and making use of new distribution channels.
Information about existing business opportunities is very essential as it helps the business owners in identifying the “ripe” opportunities that can be exploited immediately as well as strategize in order to exploit long-term foreseen business opportunities.
4. Evaluating potential business threats
Threats are potential risks that might affect the business performance based on the external pressures. Therefore, when a SWOT analysis is carried out, one is able to list the possible threats depending on the nature of your business and market niche.
The most common business threats that cause a negative impact on business performance includes; Political effects, change in legislative policies, stiff competition, new technologies, financial and credit pressures, economy performance, change of consumer tastes and preferences among others.
It’s very prudent for every business whether small or big to regularly conduct a SWOT analysis. The analysis will serve as a crucial component that will you make a sound strategic plan.
From the assessment, you will be in a better position to set realistic goals that will not only make your business venture competitive but also sustainable.