In our day-to-day work, a lot of what we do is very tactical. We work up a proposal, order new materials or have equipment maintained. Although important to survive and grow in the long term, sometimes we must step back and think more strategically. An easy way to take a business’s strategic pulse is to do a SWOT analysis.
The SWOT analysis is a simple two-by-two matrix. It lists a company’s internal strengths and weaknesses on top, and market opportunities and threats at the bottom.
SWOT analyses can help you improve your business. They also come in handy when sizing up a new, or maybe a fast-growing, competitor.
To get full benefit of the SWOT, you can activate it. As in, you can make action plans based on the analysis. But first things first. Time to break out a pen and a writing pad.
Thinking about your business, what strengths come to mind? Maybe market leader, skilled operators, low costs or good financial resources. New and effective grinders are a strength, as is a good reputation among customers.
Proprietary technology, superior innovation skills or better managed overall may also describe an organization’s strength. In rare cases, companies can be so good they get insulated from strong competitive pressures for a while.
Next, write down weaknesses. This takes a little humility and a lot of honesty. For instance, is clear strategic direction lacking, are key competencies missing, or is equipment becoming obsolete or in poor repair?
Often, I see a common weakness in the marketing area. Particularly, people pay little attention to market communication or they improperly brand the business.
A weak financial situation makes it difficult to upgrade equipment or pay for new initiatives. Not to mention employee retention. Nobody wants to work in a place where paychecks are late.
Next, look outside and think about what the business environment can offer. Can your company pursue new customers or enter into faster-growing markets?
Maybe the company can expand its range of offerings by adding additional types of equipment or colorants. Nimble companies can exploit other firms that lean toward complacency.
Finally, pinpoint threats. Sometimes these change over time but try to identify the critical ones. Common threats include price competition and customers moving to new, lower-cost solutions.
New competitors can appear out of nowhere — sometimes well-funded and well-equipped. One supplier can buy out another. Prices for commodities may go up. Compliance costs for new OSHA or EPA regulations — not to mention restrictions from the pandemic — may enter the equation.
Activate the SWOT
With all the boxes filled out, take a few minutes to prioritize the most important factors in each one. Then draw a new matrix that looks like this:
The fun starts now.
Consider your strengths and which ones you can leverage. Maybe you can call on customers who could benefit from your specific expertise. Or maybe you can gain more business from existing customers where a competitor has bungled a job.
Find ways to build on weaknesses. For instance, send “green” operators to a training class. If your marketing efforts flap in the wind, get help building a marketing playbook.
Capitalize on opportunities. Work with architects and engineering firms to show all the design possibilities concrete offers.
Defend against threats. Learn more about competitors and make it a point to follow market trends.
What gets measured gets done
In a simple table, write down actions to take, identify the responsible person and post a due date. This helps with focus as well as communication.
|Place sales calls to customers of competitor going out of business||Sally Sales||March 1|
|Find out the name of the GC for the new plant and call him/her||Dan Deco||April 1|
|Get help with marketing planning and create a sales playbook||Mark Media||May 1|
Now you have an action plan and a way of holding yourself and others accountable. Use this in leadership meetings. Keep plugging away and watch good things happen.