SWOT For Small Businesses
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and is traditionally laid out in a square that is divided into four quadrants. The idea behind the SWOT Matrix is that you fill in each section – one of which highlights your strengths, one your weaknesses, and so forth. This is a great exercise to bring together staff and business partners (if you have any), or even spouses, advisors, family, and friends as they might be able to point out aspects of your business that fall into one of these categories that you’ve forgotten or simply overlooked with the goal being to identify the positives and negatives in your business and then work to capitalize them or work on them.
To fill out the SWOT Matrix, ask yourself the following questions:
Strength Quadrant: In this section you want to list out those parts of your business that are well-suited to help the business succeed so look at things like:
- What does your company do well? What products are well-received and why? Are your products specialized in a way that the target market cares about?
- What skills, expertise, or connections to you, your staff/contractors, or advisors have that sets you up for success. This might include a trusted bookkeeper who’s a genius with numbers, a graphic designer who ‘gets’ your vision, or even your own sales skills that makes you fearless when talking with buyers.
- What is your best-selling product? What is your highest profit margin product? They’re not always the same thing!
- What do you do better than your competitors or better than similar products?
Weakness Quadrant: Here you want to look for things that may hinder your business growth such as:
- As you look at staffing and your own skill base, what business functions could use more attention and focus (hint – they’re usually the tasks that you dread doing!)
- Are there any parts of your product production and packaging that are a bigger-than-expected time suck?
- Do you have enough money to help finance your business in a way that will make it possible for you to achieve your goals?
- Are there resources, equipment, etc. that you are lacking?
- Are there areas of your business that are costing you too much money? One common complaint is that food artisans aren’t able to get good prices for ingredients and packaging because they aren’t producing at a level that provides them with large price discounts.
- Are there other logistical challenges you face such as production capacity, storage, transportation of goods?
- Are any of your products slower sellers or not giving you a healthy profit margin?
Opportunities Quadrant: In this section you want to think about those areas of your business that could help grow your business or further solidify a loyal customer base. For example:
- What else can you do for your target customers? This might be new product development, it might be enhanced customer service, it might be new technology like a new website that makes their ordering experience more streamlined.
- Are there new target markets that you could try to reach out to that you believe would be interested in your company?
- Are there trends or changes in the marketplace that you’ve identified that you can take advantage of?
- Are there potential partnerships with other businesses that you might be able to leverage?
- Are there any funding sources that you might be able to approach for more money (such as grants, loans, etc.) or experts you can collaborate with to help grow your business?
Threats Quadrant: Similar to the Opportunities Quadrant, in this area we want to take a look at what external forces might slow or hinder your business growth. Consider the following:
- What are your competitors’ greatest strengths? What are they doing well that you’re not able to because of lack of staff, funding, time, resources, etc.?
- Are there trends or changes in the marketplace that you’ve identified that may hurt your business growth? As an example, a recession or economic downturn can make selling high-priced products harder.
- Are there changes in the overall food industry or new legislation that are going to hurt your business?
- Are there specific obstacles your business face that cannot be easily remedied? For example, perhaps you have a ten-year lease on a building that is not in the best location.
Using The SWOT Matrix
Once you’ve filled in all the sections of the SWOT, you want to use the information to help you identify new goals and strategies for your business. Using your SWOT Matrix as a guide:
- See if there are any strengths that you might want to build upon because they will provide substantial movement towards your business goals. Can you use any of your strengths to knock out any of the threats you identified?
- Assess your weaknesses and determine which ones you can start working to shore up.
- Determine whether any of the opportunities you’ve outlined are worthwhile going after and, if so, create goals on how you’re going to achieve that. Based on the strengths you outlined, can of those help you more quickly leverage an opportunity? Similarly, if any of the opportunities would require something that is a weakness of yours in order to be achieved, it may be worthwhile exploring how quickly that weakness can be strengthened so that you can take advantage of this opportunity.
- Develop plans that will help you combat the threats your business faces.
While a SWOT Matrix is most commonly used during marketing planning, it can be such an important tool that it’s worthwhile to explore it while creating a business plan as it can help clarify where you stand today and help you explore new areas of growth. Much like a business plan, a SWOT Matrix shouldn’t be something you only do once and never look at again. Because market conditions are constantly changing, as is your business, it’s a tool that you should go back to at least once every year and complete as that can help guide your decision-making in the next year.