Time for Strategic Planning? Start With a SWOT Analysis
Year-end is an ideal time to get a fresh perspective on your company’s opportunities and risks as you look to the new year ahead. An analysis of your strengths, weaknesses, opportunities and threats (SWOT analysis) may be just the ticket, and can serve as the starting point for an in-depth strategic planning process. A SWOT analysis is a particularly powerful planning tool because it helps you assess your business, then use the information uncovered to determine where your focus should be. Here are three basic steps to a SWOT analysis the business advisors at Doeren Mayhew often use when facilitating strategic planning for our clients: 1. Assemble the SWOT Team One of the benefits of strategic planning is the team component – by including others in the process, you’re creating buy-in as well as accountability. For your SWOT analysis, invite all upper management and department heads to participate. Also consider asking middle management for input prior – while you want your core strategic planning team to be of a productive size, it can be valuable to use feedback from other staff levels. Another idea is to ask such influential outsiders as trusted customers and suppliers, or use customer satisfaction surveys to gather external opinions. 2. Work the Matrix Your SWOT group may find it helpful to organize their thoughts via a worksheet or matrix that looks something like this: For each worksheet quadrant, you’ll have a series of questions for the group to address. They should record the answers under the appropriate heading. Doeren Mayhew recommends doing this exercise prior to your SWOT analysis meeting. Strengths are often a good place to start, because they’re easiest to identify and get the group started on a positive note. List your advantages and the things your company does well:
- How are you better than your competitors?
- What does the marketplace see as your strengths?
- Human resources – a skilled labor force would be a plus here.
- Financial resources – do you have a strong balance sheet and cash flow?
- Marketing – do you pride yourself on a powerful brand name?
- Operations – consider efficiencies, your facility, etc.
Then drill down into these to uncover the “why?” For example, if your skilled workforce is a noted strength, the “why” might be your strong recruitment procedures or an effective training program. Weaknesses are often harder to discuss than strengths because they highlight your company’s negative aspects. This is where you may get the least-biased responses from customers and suppliers, or from your customer satisfaction survey results. To identify weaknesses, ask:
- Where do you lack resources?
- What could you do better?
- What would customers say are your weak points?
- What’s keeping you from improving?
- Do you have access to information that is useful in making decisions?
Opportunities arise from external factors or changes. When identifying opportunities, keep in mind the strengths that will allow you to take advantage of them. You might ask:
- Are there new trends your company can profit from?
- What else does your current customer buy that you might be able to offer?
- What regulatory or political changes may help your sales or cost structure?
- Are competitors experiencing problems that could work to your benefit? For instance, if a major competitor is going out of business or is in financial difficulty, and you are financially sound, this may be the ideal time to acquire that company.
Just like opportunities, threats exist outside your organization and may adversely affect your business if you don’t plan ahead. Ask the following types of questions to identify threats:
- Could technology render your products obsolete?
- What if a significant customer or supplier went out of business?
- What if suppliers raise prices?
3. Translate Opportunities and Threats Into Actions Whatever threats you come up with, the purpose of your SWOT analysis is to create awareness, prepare action plans and set priorities in the best areas. A good place to start is protecting against threats that involve your weaknesses. Say one of your weaknesses is high employee turnover, and you perceive the tightening labor market as a threat. It might be wise to develop better employee relations and retention plans sooner, rather than later. Once your action plan is created, be sure to manage the plan with regular meetings to monitor progress and move forward on next steps – no strategic plan gets anyone anywhere without management of the progress. A SWOT analysis can help ensure your business is equipped to deal with today’s issues, while keeping an eye on the horizon. You can perform your company’s SWOT analysis a single time, or repeat it on a regular basis to stay prepared for meeting challenges and seizing opportunities. For assistance putting a SWOT analysis and strategic planning process to work for your business, contact Doeren Mayhew’s business advisor in Michigan, Houston or Ft. Lauderdale.