Tag Archive | SWOT Analysis

4 Benefits of Conducting SWOT Analysis in Your Business

 

SWOT

Photo Credit; Workandlaunch

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.

 

Read Also; Importance of Creating a Strategic Plan for Your Business

 

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.

Bottom line:

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.

 

Importance of Creating a Strategic Plan for Your Business

 

strategic planning

 

A strategic plan refers to a clear action plan outlining where your business or company is heading to by defining long-term goals.

 

When you start a business, it is advisable that you formulate clear procedures stipulating the business long-term plans. Such strategies usually serve as guidelines that will help you plan effectively on how to achieve the set goals and objectives.

Strategic planning is a critical component of any business as it forms the backbone that defines company’s vision, mission as well as the foreseen fortune of the business. In addition, creating a strategic plan will help you establish;

1. A clear blueprint of your business

Strategic plan helps in creating the projected end results of the set goals and objectives. When you develop a strategic plan, your business is guided towards the long-term goals and thus, everyone is motivated to work harder in order to attain the target results.

Future business plans such as creating a new product, venturing into new markets or expanding the business and setting up new branches are all made possible through strategic planning.

2. A SWOT Analysis for your business

When you conduct a SWOT Analysis, you are able to identify your business strengths, weaknesses, opportunities, and threats.

Once everything is critically analyzed, developing a strategic plan often helps in creating a robust business that is viable and competitive.

Effective SWOT Analysis helps managers to prioritize strategic goals, therefore, positioning their business/companies above the bar through increased efficiency.

Read Also: Business plan explained

3. A broader thinking in terms of business strategies

There is no any set formula of creating a strategic plan. This is because different businesses have different operations, goals, and objectives.

Therefore, a strategic plan is a product of shared thoughts among all the stakeholders. By brainstorming, the decision makers are able to make informed decisions in terms of priorities so as to attain specific goals.

It helps in formulating the methods to be used in achieving various business targets such as; how to prepare adequately for a new product launch, how to adapt to new technological methods in the markets and equipping the workforce with new training,  or how to venture into a new market segment and remain competitive.

4. A fair shared vision between the business and your personal vision

When running a business entity, there is always conflict of interest that exists between the owner and the business itself.

This is because; the business owner/ stakeholders have different personal visions that are different from the business entity.

Creating a strategic plan helps in reconciling the two separate visions thus, helping in the formulation of policies that will guarantee a shared vision.

Read Also: Top 10 Brilliant Business Ideas for Startups

Strategic planning will help you align your future personal goals with long-term plans for your business.

When everything is  clearly set, you can easily incorporate personal goals into the strategic planning processes so that you can achieve a winning shared vision for you and your business in future.

Bottom line:

Although strategic planning stipulates where the business is going in the long-term, it is highly advisable to review your strategic plan regularly. 

Such review practices will help your business gauge itself with other competitors, review time-lines for the ongoing projects and revise strategies when new opportunities or threats arise. It should always be adaptable and relevant at all times!