The quote: “if you fail to plan, then plan to fail” may just be an empty quote shared by hustlebros on LinkedIn, but there’s some truth to it. As rumblings of a second COVID-19 wave circle, businesses and services are planning to reopen. When those doors open, they’ll open to a different world than when they shut. Some companies have had to completely transform, while others simply haven’t survived. As a small business ourselves, it’s awful to see our SMB kin so helpless. What we can do, however, is try to offer some advice and a framework for understanding your brand in the new normal.
For the reasons above, it’s the right time (and more important than ever) to understand your brand’s position and potential – including potential weaknesses. The useful (yet simple) analysis that many businesses use to do this is called the SWOT analysis.
What is a SWOT analysis?
A SWOT analysis is a dissection of your business’ Strengths (S), Weaknesses (W), Opportunities (O), and Threats (T) – a high-level audit of sorts. These four categories get placed on two axes; internal/external and helpful/harmful, forming a matrix. We’ve used it countless times for clients (and ourselves) before. It’s your opportunity to get your ducks in a row so that you can identify critical factors in an around your organization. Here’s a template:
Simple enough, right? We’ll guide you through in more detail a little bit later. As with any tool like this – the more granular, specific, and detailed you get with your answers, the more you’ll get out of it. But, a SWOT analysis isn’t just for the branding bigwigs, either. Conducting one is actually vital for businesses to recognize strengths/weaknesses and improve their operational efficiency. The analysis can also help brands (big or small) overcome barriers in their industries and beyond.
Take this very detailed SWOT analysis of Starbucks below, for example. The Business Strategy Hub specifically details many points under each section, influenced by each part of the axis. It clearly describes the strengths, weaknesses, opportunities, and threats. Some of these factors include contributing to community development and resolving issues with social activists. You can also see that independent, fair-trade coffee houses are on the rise and are a threat to the brand. With more socially conscious shoppers than ever, Starbucks may miss out on strategic partnerships and opportunities to expand in developing markets. Since this analysis was created pre-lockdown, it also doesn’t reflect the added challenges of physical distancing, etc. These more recent issues bring a whole new layer to the SWOT that you’ll need to consider.
Okay, got it. So when should I do mine?
One of the significant advantages of the SWOT analysis is that it’s relatively low cost. You’ll only need to take some time to sit down, apply it to your business, and fine-tune it. All of this means you can do it at your convenience. However, it’s best to complete a SWOT analysis in the early stages of whatever you’re working on – that new product, a new market, or even a new business altogether. Conducting a SWOT analysis in the early stages of your entrepreneurship will help you get the lay of the land. It’ll allow you to build the foundation you need to survive (and thrive) during those tough first few months. At the same time, it’s never too late. Conducting a SWOT analysis is an integral part of reassessing your business’ current position to execute a new strategy.
Before you begin your SWOT analysis, do some research to fully understand your industry, your customers, and your competitors. Put some feelers out there; see what your partners, staff, and clients have to say. Checking out more SWOT examples (especially in your industry) also helps you understand how to fill one out better.
Great idea! How do I get started?
It’s worth noting that a SWOT analysis may suffer from internal and individual bias. After an initial meeting, let your core team work on their matrixes alone. You can then come back together to discuss them and agree on the best answers. If you have the resources, it might be smart to have an outside consultant or partner to review the results objectively and provide more advice.
It’s always good to start on a positive note. Strengths are the things that your business does particularly well. Things that set you apart from your competitors – your core competencies. What do you do that gives you an advantage? It could be that patented secret ingredient of your business model, otherwise known as your unique selling proposition (USP.) It could also be the smaller, less visible processes that help your business remain a well-oiled machine.
Taking our Starbucks example above, we can see that the analyst has incorporated everything from financial, HR, supply chain, and even brand image. If you do it well, don’t be afraid to add it here.
Obviously, your weaknesses are nothing to be ashamed of. You wouldn’t have gotten this far if you thought that. To address your problems, you have to be open and non-defensive about them. As with the strengths, remember to examine every aspect of your business (product, people, processes, and messaging, etc.) Think of your consumer’s journey from start to finish – are there any common complaints? From the ground up, it’s essential to list as many internal factors that are holding you back from growth.
The SWOT is not a marketing tool. Nobody outside of your organization will see it. The only reason the Starbucks example above exists is because it was performed externally, with no involvement from the coffee giant. So be honest!
It’s time to moving onto the external examination of your business and consider your opportunities. Remember not to confuse opportunities with strengths, though. Your organizations’ opportunities could include bringing in new processes or technology, specialized training programs, partnerships, and market shifts. Opportunities are big or small external advantages that may allow you to succeed when moving forward.
The Starbucks SWOT analysis mentions factors such as expansion into new markets, an ever-increasing product line, and more. This one is always interesting to fill out with other members of your company because everyone has different ideas – it’s fun!
A threat is anything that can negatively affect your business outside of what you offer. They include obstacles that you may face, such as getting your product to market, changing policies, evolving technology, and inadequate resources. Threats can also be factors that open your brand up to the competition. Understanding what has the potential to harm your business will allow you to better equip yourself with strategies to avoid failure. As an external factor, it’s vital to explore how others see you – competition and consumer alike. Think about what really puts your business at risk.
Much like with the weaknesses, this might one might hurt a little. Especially if your threats are controversies like they are with the Starbucks SWOT assessment.
Tip: All of your customers are in some way unique, so treat them that way. If your business aims at several audiences, consider completing parts of the SWOT from the point of view of each target audience. You’ll be surprised how different each matrix might become.
So, what are my next steps?
It’s crucial to acknowledge that the SWOT analysis doesn’t prioritize your issues and provide the solutions for you. However, it does give you a fresh, holistic perspective to start prioritizing those issues and finding said solutions. This is why your actions following the review are just as significant as the analysis itself. If your SWOT is detailed and you’ve thought through your next steps, you’ll be saving your business time and money in the long run. So carefully examine your matrix and plan accordingly.
At a basic level, you need to focus your effort on addressing your major weaknesses and maintaining your core strengths. Then weigh your opportunities to see which of those you can pursue. Gaining control of your threats might prove more difficult, as some of these factors may be out of your hands. The key here is to be alert and act quickly if anything changes on the threat front. Naturally, you may see some overlap between your factors – and that’s okay. You might find that reducing some of your weaknesses paves the way for more opportunities, or even renders a threat obsolete. Hopefully, you’ll see an opportunity become a strength too.
To keep yourself in check, treat your post-SWOT actions like individual projects, each with deadlines and dependencies. Keep your goals actionable, clear, and realistic.
What you don’t yet know about your SWOT factors might have the potential to sink your business before it even starts. Performing the analysis as early as possible gives you the best chances of thriving in a competitive consumer landscape. Finally, remember that this isn’t a “set it and forget it” tool. Keep on top of your SWOT and update it as your business, or the world around it changes.