Calling In The SWOT Team
Let’s say you’ve got a business idea, but you don’t know if it will fly. The question for would-be entrepreneurs is, how do you know if your idea is a good one? There are lots of ways to think about the viability of a business opportunity, but SWOT analysis is one of our favourites. SWOT is a handy tool that will help you analyze your business idea. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. When you identify the strengths and weaknesses of your business concept, you look at what’s going on inside your company, while identifying opportunities and threats provides a framework to look at what is going on outside your company. Thinking about all four aspects of your business together will help you to create a strategy that matches your abilities with the realities of the outside business world. Strengths: These are store location, or first-rate marketing skills. Weaknesses: These are things that you and your company are not as good at in comparison to your competition. Examples include having high operating costs, a ho-hum product, or product quality issues. Opportunities: These are conditions in the market that are good for your company. Examples include demand for your product in new markets, changes in customer’s buying patterns, or the demise of a competitor. Threats: These are conditions in the market that are not good for your company. Examples include the emergence of a new competitor, a recession that impacts customers’ willingness to spend money, or changes in market trends. Once you have identified your strengths, weaknesses, opportunities and threats, you can develop a strategy by thinking about the following questions:
- Which strengths will be most valuable in allowing me to keep the competition at bay?
- Which weaknesses will hold me back, and what can I do to reverse them?
- What opportunities do I have the skills to successfully pursue?
- What threats am I most vulnerable to, and how can I develop strengths to defend against them?
Spend some time thinking about other companies you know and what their strengths, weaknesses, threats and opportunities might be. It’ll get the juices flowing. Now have a look at how this framework might apply to you in your new venture. If you already have your business underway it’s still a valuable exercise and can also be applied to new projects within your existing company. It’s just four steps, so give it a try. A little SWOT goes a long way.