Why SWOT is still one of the most incisive planning tools
Undertake your digital S.W.O.T and understand where opportunity lies
SWOT analysis was invented in the 1960s by Albert Humphrey at the Stanford Research Institute. The aim was to find a way for companies to conduct executable, rational long-term planning, and the S.W.O.T model brought some much needed accountability and objectivity.
SWOT analysis remains a popular tool to this day, thanks to its simple 2×2 grid format that can be used to identify specific strengths and weaknesses in work and personal life situations. This article reinforces the importance of SWOT analysis, and why it’s still an incredibly useful tool when it comes to planning your brand’s strategy.
In this article we cover the following:
- What is S.W.O.T Analysis
- What are and where to look – internal and external factors
- How to conduct SWOT analysis
- How to use your completed SWOT
- Why small businesses need to do a SWOT
- Free template for you to takeaway
What is S.W.O.T Analysis
SWOT stands for:
Your company’s unique selling points. If you’re a cafe, this could be your amazing coffee beans, prime location, great customer service, loyal customers.
The main issues with your company. Weaknesses in your cafe business could well include charging high prices, food wastage or lack of modern technology/apps.
What opportunities exist out there? Could your cafe revamp your menu with the latest food trends, or upgrade its decor, or undertake a big marketing campaign?
What are your business’ biggest threats? This could be macro level, such as the unstable economy or rising food prices, or more micro, such as the rival who just opened across the road, or your lazy head chef.
Where To Look: Internal & External Factors
As its name suggests these four elements are common to SWOT’s. But where to look for the information to fill in each elements. This is where internal and external factors come into play.
Strengths and weaknesses are typically thought of as internal factors as they are factors that are generally under your control. Opportunities and threats on the other hand are considered to be external factors are they tend to be factors that as a business you have less control over.
Lets say that your website poor conversion rate, this is a weakness, but improving conversion rate is under your control, making it an internal factor. Compare this to say, a global pandemic (very topical) that may reduce market size, a very real threat and certainly not in your control, a classic external factor.
How to do a S.W.O.T analysis for your business
Before we dive head first into each of S.W.O.T sections we need to ask and answers some questions to dig out the data we need.
Let’s kick off with strengths. To understand the strengths of your business you could begin with asking these questions:
- What do you humans (customers) love about your product or service – Tip: Look at your reviews and customer feedback. It has to come from them to be authentic
- What is your unique selling proposition (Jargon alert – This is a great explanation of what a USP is) or offer – TIP: This is not just price or discounts. From example is your are hairdresser your USP could be the experience in the salon – you sell the confidence to be yourself
- What are some of the most positive attributes of your brand- TIP: The answer often lies close to the reason people chose to but your product or use your service. Listen to your customers or even better ask them.
- What do you do that is better than others in the same industry – TIP: This could be quality, service, experience or value to name a few. It will be closely aligned to why you started the business in the first place.
- What resources or people do you have that competitors don’t?
- What are the common areas of complaint mentioned about your business? –TIP: Like with your strengths checking your reviews for feedback will be a good starting point.
- Why do customers cancel or return items – TIP: Diving into your customer service communications will unearth insights in this area.
- What are the biggest obstacles to making sales currently? – TIP: Digitally things to look at will be metrics such as conversion rate, abandonment rate, traffic acquisition and sign ups. Google Analytics is a great place to look for these metrics
- What could your business do better? – TIP: Look at areas that surround your core service or product. Delivery, price, add value or service are all core considerations.
In addition you can reverse out the questions from your strengths sections too. So “What resources or people do you have that competitors don’t?” can become “What resources or people do your competitors have that you don’t?
Strengths and weaknesses are internal factors and will be easier to figure out compared to the opportunities and threats facing your business. This is because they are internal factors. External factors that define your opportunities and threats are external factors and are often not immediately apparent.
For this part of your S.W.O.T you have to integrate research elements into your questions.
Here it helps to look at both opportunities & threats together:
- Competitor research – TIP: This can range from quick desktop research to full blown competitive intelligence. The key is note the differences to your business and identify your opportunities
- Market research – TIP: As business owners we often have our figure on the pulse of our market. If so draw on this, if not dive in. Check the trade publications for your industry & check in on the key authorities to see what is happening.
- Business trends – TIP: Here we are talking about wider business market trends that may provide opportunities.
- How can we improve our sales/customer onboarding/support processes?
- Which digital marketing channels have we yet to fully utilise?
- Can we further leverage budget, tools or other resources to increase capacity?
Doing your own S.W.O.T Analysis
Now you know the questions to ask to get the data its time to do your S.W.O.T.
To help we have pulled one together for an established ecommerce store selling clothes, with no bricks and mortar stores.
Here is our S.W.O.T analysis for the ecommerce store:
The matrix format allows you to quickly identify the elements as well as the different internal and external factors.
How to use your completed S.W.O.T
By now you are feely pretty darn smug. You have a freshly minted SWOT. Now let’s take action.
The ideal way to dive into your SWOT is to match your strengths with your opportunities then look to convert your weaknesses into strengths.
Using your strengths
The good thing about the strengths you have identified is that they things you are already doing.
Our example shows the the ecommerce business has a effective brand proposition, great website and a large active database. This tells the company to keep trading on the brand proposition using the website and email to continue to build customer relationships and sales.
In essence its a case of “do more of what ya good at”.
Plugging your weaknesses
Taking action to plug your weaknesses is not as easy as it sounds. You have to be honest with yourself in the first place.
In our example the weaknesses vary in difficulty. Weaknesses around marketplaces and social can be common issues for smaller businesses where budget and resources are constraint. But in relative terms they can be addressed easily. Whereas the take up of new clothes lines will need to challenge entrenched behaviour, as called out in the strengths.
However this is where we start to apply one of the core concepts behind SWOT – turning weaknesses into strengths. So our example ecommerce business could begin to leverage the active database to drive uptake of new clothing lines.
Opportunities are where actionable plans start to come to life. Here we can look at the identified opportunities through the lens of your existing strengths.
In our example a clear opportunity exisirts to imporve the converison rate of the site. This builds on a strength of the business, a responsive mobile first site. This may require investing in expertise to help improve the UX leading to conversion improvements. Plans for this can be laid out and roadmaps made.
Every business’ opportunities will differ but its is vital that clear and decisive plans are made to capitalise on the opportunities.
Anticipating and limiting threats you have identified is not easy, because threats are primarily external factors.
Every threat will be different and require the tailored reaction. Monitoring and responding to your identified threats will be among your top priorities.
In our example all the threats all uniquely challenging. To mitigate the competitors our ecommerce company may have to reduce product quality or cut profit margins to keep ahead. Similarly, economic uncertainty is virtually impossible to fully mitigate, making it a persistent threat to the stability of our example business.
Why you need a SWOT analysis
So you are now fully armed with all the tools to conduct your very own SWOT analysis, and you should.
The SWOT analysis is a very versatile tool. You can dive deep into, say, your online marketing activity. It’s even possible to highlight actionable areas like customer acquisition, conversion, retention and growth and conduct individual SWOT analysis. This allows you to pinpoint where to devote your resources and where the best opportunities arise.
Expanding into a new market? Considering a website redesign? Tossing up a new business idea, investment opportunity or potential partnership? These are a few examples in which a SWOT analysis will likely prove beneficial to your decision making process.
Whether you apply your SWOT analysis to a whole organisation or a particular department, individual or team, it can help to evaluate a product or brand, a specific business process, an acquisition or partnership, the merits of outsourcing certain arms of your business, a potential product market and so much more.
Another great thing about a SWOT analysis is that it’s simple and cost effective. You don’t need to attend a week-long workshop or arduous training day. All you need is knowledge about your business and the industry in which it operates, and access to facts and stats.
We have produced a simple template to get you started, download it and dive into the world of the SWOT analysis.