A strong, healthy business strategy is necessary to build a successful business, but what makes a business strategy vital?
One of the most effective ways of analysing the health of your business strategy is to utilise the SWOT matrix.
Strengths, Weaknesses, Opportunities, Threats – analysis of these interior and exterior factors create an audit of your business' strategy and the position of your firm in the market.
Think of the SWOT as a yearly medical check-up: blood tests, chest exams and measuring cholesterol levels help identify the areas that need attention and those that are trucking along healthfully.
Strengths and weaknesses are controllable variables- you can influence and change them. Opportunities and threats represent variables that are out of your direct control.
Together they work to identify the best way forward - that will best align your resources and capabilities to ensure the best chance of a thriving business.
Start with identifying strengths. These can be internal, procedural, operational, personnel or team related, tangible or intangible. Strengths are the driving qualities that allow the business' mission to be carried out.
Strengths should reflect the areas in which your business is most successful and can therefore be leveraged to achieve your objectives.
Conversely, weaknesses are the qualities standing in the way of accomplishing goals and achieving success. Weaknesses are a liability that may continue to build roadblocks on the path to success. They should be minimised or eliminated.
Opportunities can be tricky- learning how to recognise them and deciding which opportunities may prove the most profitable is a critical aspect of moving your business forward. Opportunities may show themselves in the form of competition, industry, the marketplace or even technology.
Threats endanger the stability and survival of a business. Much like a family history of heart disease can act as an early detection tool, recognising threats early on is the most effective way of tackling them.
The SWOT analysis is best used as a guide, not a direct prescription. It can provide security and stability and provide early detection of developing problems to allow them to be tackled immediately. Long term, the SWOT analysis is what will keep the business' heart beating.
By the way, we use a tried and tested process to cost-effectively complete a SWOT analysis with you.
By Mike Reddy, Business Coach