Use SWOT analysis as part of a regular process of reviewing your business performance. You may also want to carry out a SWOT analysis in preparation for raising finance or before bringing in consultants to review your business. 1.1 Decide who to involve.
• Key participants are likely to include the managing director and heads of department. Involving others will give a fuller picture and help to gain their commitment to the process. Find out what customers think using a customer satisfaction survey. • Consider bringing in sympathetic outsiders who know your business and market (eg customers and suppliers). • Many businesses find a consultant most useful for their first SWOT analysis. 1.2 Brainstorm the issues. Ask everyone to identify any strengths or weaknesses they feel the business has, and any opportunities or threats they think the business faces. • Encourage participants to make suggestions without trying to judge how important the issue is. • Concentrate especially on identifying weaknesses and threats. • Be aware that lack of honesty is a common problem.
For example, most people find it easier to identify strengths and opportunities, particularly if the performance of key people (including yourself) is one of the weaknesses. • You may want to use checklists to prompt further suggestions (see 2, 3, 4 and 5). SWOT analysis
• Organise related ideas into groups.
Recording suggestions on Post-it notes
or cards that can be moved around and rearranged makes this easy. 1.3 Evaluate the significance of the issues that have been identified. To help you, use relevant data from your own and similar businesses (see box). • Update your conclusions from any previous SWOT analysis. For example, a strength may no longer exist (eg if last year’s cutting edge product is now obsolete). • Assess whether your strengths (or weaknesses) give your business a significant competitive advantage (or disadvantage).
For example, your strong research and development programme is useless unless you have the resources to exploit the results. Do not be surprised if certain factors crop up as both a strength and a weakness. 1.4 Create a simple, clear action plan.
There is no point holding a SWOT analysis if it does not result in action. • Set out what will be done to address weaknesses, capitalise on opportunities and deal with threats (see 6). This includes the steps to be taken, the personnel who will be involved, the timeframes and the budget. • Involve key personnel in drawing up the action plan to get their commitment. 1.5 Keep the SWOT analysis and action plan to hand for review before important decisions. • For example, as a reminder of what you should be looking for when recruiting a new employee. 2 Strengths
Your strengths are usually easy to identify, through your continuing dialogue with customers and suppliers. Your records (eg sales) will also help to indicate areas where you are particularly strong (eg rising sales for a particular product). For most businesses, strengths will fall into four distinct categories. 2.1 Sound finances may give you advantages over your competitors. Important factors might include:
• Positive cashflow.
• Growing turnover and profitability.
• Skilled financial management, good credit control and few bad debts. • A strong balance sheet.
• Access to extensive credit, a strong credit rating, and a good relationship with the bank and other sources of finance. 2.2 Marketing may be the...