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SWOT Analysis – Swot’s That And How Can It Make My Business More Profitable.

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Article Overview: As an experienced business consultant, thought I would risk the wrath of my peers and show you how to use one of the consultant’s most powerful and useful tools – The SWOT Analysis. SWOT stands for Strengths, Weakness, Opportunities and Threats.

SWOT Analysis – Swot’s That And How Can It Make My Business More Profitable.

As an experienced business consultant, thought I would risk the wrath of my peers and show you how to use one of the consultant’s most powerful and useful tools – The SWOT Analysis. SWOT stands for Strengths, Weakness, Opportunities and Threats.

Strengths and weaknesses are the internal factors of your business. Opportunities and threats are external factors that affect your business.

First of all get a large writing pad and put a large  in the center of the page. Then put the titles Strengths, Weakness, Opportunities and Threats around the cross – one in each sector.

Now strengths and weaknesses are internal factors as we said above. They are found in the following:
1. Management structure: such factors as relying too much on the owner. Needing more managers etc.
2. Your workforce: including employee turnover and difficulty of finding skilled staff.
3. Sales: strength of sales, how reliant your sales are on external factors (think ice cream seller), cyclical sales.
4. Operations: your internal efficiency, speed of manufacture or delivery.
5. Financial: cash flow, time to collect on invoices, ease of obtaining loans.

Your opportunities and threats can be found in the following categories:

1. Threats of new entrants to your market: Could a big box retailer open up near your business. Do you hold a patent that puts a brake on competitors?
2. Supplier’s bargaining power: Can you suppliers force you to take large deliveries. Are suppliers difficult to find? Is supply readily available?
3. Customer’s influence: Do you rely on just a few customers? Can some of your customers insist on lower prices? Do you have a lot of late payers?
4. Competitors: Is competition very strong? Do you have a near monopoly?
5. Substitution: Are there lots of other products that could be purchased rather than your? How unique or superior are your offerings?

Now you need to grade these SWOT’s. There are two ways to do this – pictorial and numerical.

Pictorial: Place each of the SWOT’s so that the more troublesome the problem is the farther away from the + you place it. The better the factor then the closer to the + you place it. View the grid and look at solving the outlaying problems first. The tighter the display is to the center of the + - the better shape your business is in.

Numerical: Give each item an rating from 1 to 5 as to its importance to your business with 5 being the most important. Also give each factor a rating from A to E as to its impact on your business, with E being the highest impact. Now investigate all the E’s and 5’s if they are bad factors then change or mitigate them. If they are strengths and opportunities then build upon them. Obviously the more high strengths and opportunities combined with low weaknesses and threats the better your business is.

So why do this? Well going through this exercise forces you to look deeply into your current and potential business. It also provides a model of how strong your business is and areas that you should be concentrating on. And thousands of business consultants can’t be wrong!

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Article Tags: bargaining power, business consultant, business opportunities, cash flow, deliveries, employee turnover, external factors, flow time, internal efficiency, internal factors, invoices, management structure, monopoly, skilled staff, strengths and weaknesses, strengths weakness, swot analysis, useful tools, wrath, writing pad



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