So why don’t more businesses use SWOT analysis?
Too often Consultants make SWOT analysis overly complicated and academic.
I think it vital that the exercise has a clear purpose and is kept simple.
A good effective SWOT analysis will bring valuable insights into your business planning.
It will help set priorities for investment and in forming a view as to whether or not your business is likely to grow.
If your business is unlikely to grow the SWOT should yield clear Actions you can take to turn that around.
In my experience – many “consultants” miss the most important question right at the start.
Step 1 – Answer the Key Question - WHO are your Targets?
Too often companies start work on a SWOT as an academic exercise.
I like to make it “real” – visualise the competitors.
- What competitors do you admire?
- What competitors are you pitching against and winning or losing?
- Who do you want to compare your company to?
So key first question – who are you playing against?
Step 2 - Carry out “Benchmarking”.
This also sounds academic but it can be very easy and kept very practical.
Now you have a clear Competitor in mind the purpose is much clearer.
Throughout the benchmarking you have clear questions to answer:-
- Are they Stronger than us? Why? How can we catch up?;
- Are they Weaker than us? Why? How can we stay ahead?
Sources of competitor information that allows “benchmarking”.
1 Recent customer wins and losses.
Who did you win the business from? Ask the customer why they chose you?
If you lost business, go back to the customer and ask “why” if you don’t already know.
What can you do to “Win more” and “lose less”?
2 Competitor website can help you find out:-
What is their proposition? How does it differ from your own?
What are the key services they “push”?
What their customers say from testimonials and case studies?
3/ From Companies House you can find out:-
How long they have been trading?;
Who are the directors?;
Are their records up to date?;
How fast / slow do they file results?
The strength of their Balance Sheet – shareholder reserves vs Debt;
If small company then using Debtors you can estimate Sales and whether they are growing or declining;
If a large company – then you also get significant Profit / Loss information.
4/ From LinkedIn
How many employees on LinkedIn?
You can probably find the key members of their top team. Are they more experienced?
How does your organisations compare?
How can you use being bigger OR being smaller to your advantage?
From my experience this information is easy to find and you can ask members of your top team to do the work. For example, the FD does the work on Companies House; Marketing on the website; HR review LinkedIn and Sales explain gains & losses. They are all likely to have further “soft” intelligence and insights from customers; suppliers; etc..
The MD or owner will have a view on the general market trends in their sector and for the overall economy. They should also bring in any major threats from the Disaster Recovery review. In this way you can cover off external Opportunities and Threats.
Step 3 Pre Budget workshop (or 3 Year Plan)
The board should review all this information in a “workshop” (half day meeting).
Each function head can then run though how your company compares versus the competitors and what the key Strengths and Weaknesses are.
As a group you can pull the strands together to form a view as to the most important Strengths; Weaknesses; Opportunities & Threats that your company faces.
As a team you then decide how many you can “fix” and how many areas you “maintain” in the next 12 months and estimate the level of investment needed for the priority areas.
The SWOT analysis can really help the board set priorities to ensure they stay ahead or catch up versus their key competitors.
The work can help justify an investment in a specific area (make a business case) and uncover some opportunities that may be very easy to take.
For example, the review of competitor proposition and service offer can present some very simple changes that can be made very easily and at low cost to your website and “pitch”.
The analysis might suggest some new services to offer or new channels to enter. It can give rise to major strategic initiatives to enter a new channel or even to look for an acquisition to address a weakness or make a strength even stronger.
If you would like to learn more or get some practical help with Competitive analysis, Competitive benchmarking or Business Planning in general then please do get in touch.