Business planning, whether it’s your first business venture or a growth strategy, is incredibly important. One of the most important things to remember when planning a business strategy is this simple abbreviation: SWOT. SWOT stands for strengths, weaknesses, opportunities and threats. They are the four pillars of business planning, and it’s vital that you get used to those terms, what they mean, and how they apply to your business.
Some people might already understand what those words mean. They’ll write down the words and list a number of things under each category, but are you SWOTing correctly? Using a template is one of the best ways to plan using these four terms, but let’s look at each one in detail to ensure you have a good idea on how to use it correctly.
Let’s start with the first word of the abbreviation. Strengths focuses on your current business strengths. This means whatever your business is currently great at. Perhaps you have an amazing product that people love, or maybe you offer fantastic customer service that none of your competitors do. This is where you get to boast a little about your business and write down some things that you personally think are your strengths. However, before you confirm this list, make sure you have proof of it. You could ask members of staff, friends, family members, social media, or even business contacts. Make sure those strengths are things you are publicly known for and not something you perceive to be true.
Next, let’s take a look at weaknesses. Some business owners refuse to admit they have weaknesses, but customers will usually be eager to tell you where your business is failing. This is all subject to opinion, so it’s important to identify weaknesses through statistics and not guessing. For instance, perhaps you have an employee that has a low attendance rate. This could mean that you’ve got a lazy employee on your hands and you may want to consider replacing them or assigning them a different job. Another weakness could be your lack of customer support, as shown by your low ratings and constant complaints, or your lack of a customer service department.
Opportunities are situations that you can take advantage of in the future or present. A good example would be the opportunity to diversify your product. Perhaps a new audience is showing interest in your product and you want to try and modify your famous product to fit that new audience. This is what’s known as an opportunity, and you want to take advantage of these as often as possible in order to grow your business.
However, those opportunities can occasionally lead to threats. If you try to diversify, you may fail and end up with an inferior product, and your resources will be wasted on trying to appeal to another audience instead of refining your current product and appealing to your main audience. This can severely harm your reputation and you may find yourself struggling to regain your hold on the market.