It’s that time of year again!
The New Year is fast approaching, so it’s time to give yourself a SWOT and whip your business into shape.
Even if you were a good boy or girl this year and did everything right by your business, a pat on the back won’t serve you well. A good SWOT, however, will help you anticipate and prepare for what’s to come in 2015.
This Won’t Hurt a Bit
The SWOT won’t physically hurt (unless you trip over your ego and hit your head on your business plan). It’s just an analysis of your organization, industry, your competition, and how the market is doing in relation to your line of business.
The SWOT Analysis brings to light four essential things every business leader needs to know about their organizations:
Strengths – an internal look at your assets, financial position, staffing, value proposition, market positioning, product lines, etc.
Weaknesses – an internal look at those areas of vulnerability and potential decline such as product lines, staff deficiencies, process gaps, or technology exposures.
Opportunities – an external look at potential new sources of revenue, markets, or strategic advantages primed for pursuit
Threats – an external look at the lions, tigers and bears that could potentially eat your lunch, or at least steal your lunch money. These include new market entrants, regulations, or expiring contracts.
Effective leaders will run through a no-holds-barred SWOT once a year and will be brutally honest about each area. If done well, a SWOT analysis will literally tell you what you need to focus on in the year ahead.
As a side benefit, the SWOT will train you to be an expert in your own business and industry.
Involving core team members is a must. Never SWOT by yourself. You’ll go blind.With a SWOT you are looking to validate things you already know, identify new things you haven’t thought about, and everything in between that can be a factor in running the show.
Here are five steps to getting your SWOT on:
STEP 1 – Reflect, Ponder and Make Notes
Take some reflective time to think about your business. What has your gut been saying this year (guts do provide useful information though it’s wise to make decision on more than just gut). Based on this past year, where do you think your business, industry and local market is headed? What evidence have you seen to support these impressions. What have you read or heard from others that make you think this way? Put these thoughts into bullets for the next step.
STEP 2 – Gather Data and Develop a Knowledge of Facts
Here is where you need to get specific data to support or deny your gut. Rely on your own data first. Gather pro forma and profit/loss statements. What has actually happened over the last 12 months? Look for increases, declines, trends and abnormalities. Were your revenues in a particular area flat? How were your gross margins? Were your expenses in line with expectations?
STEP 3 – Check Your Understanding of What You Learn
What are the implications of what you are learning? Analyze the cause and effect. Figuring out the implications will help you decide what to do about them. Evaluate data on marketing strategies (those that have worked and those that have tanked) for your company. Learn what marketing strategies your competitors are using. Think about what companies’ positions and strategies you admire. Then ask about the experiences of others.
STEP 4 – Net it Out Into Key Insights
Through your SWOT, you learn the nuances of your market, industry, and your own business. If you listen to them these insights will keep you focused on the right things and you will know where your key leverage points (those things that make a huge difference) are. Net out the things you learn into a into a few insightful bullets for the final step. This will give you confidence in what you learn through your SWOT.
STEP 5 – Turn Your SWOT into Wise Decisions
Remember that the SWOT exercise becomes a waste of valuable time if it does not generate actions. Make plans for going after new opportunities, meeting challenges, beefing up weaknesses, capitalizing on strengths and even switching gears where necessary. For every SWOT insight, what are you going to do about it in the coming year?
It’s Not The Economy
One final note. Placing blame on conspiracy theories or the current market will do nothing to fix any negative situations, only new actions will. You can say, “it’s just the economy,” until the cows come home, but if you take the time to understand specifically how the economy is impacting your business through your own numbers and experiences, you can then make the right adjustments to reposition your company.
Give yourself that SWOT now in December.
When the New Year turns over, you can toast to the great strategies that will unfold for you in 2015.
When was the last time your team did a SWOT?