15 Important Benefits of a SWOT Analysis for Small Business

Leanne Di Fazio — Mon, 05 Jul 2021 23:13:37 +0000

What is a SWOT Analysis?

A SWOT analysis is a business analytics tool. With the right knowledge, it can be used across your entire business or to analyse specific areas of your business. It can be used quickly and effectively to understand what has been happening, what is going on now and where you may want your business to head in the future. It helps you develop a new strategy or to determine if your strategy is on the correct path and in line with your business goals.

A SWOT analysis forms a major part of any business and marketing strategy and is beneficial for your business when used correctly. This article focuses on SWOT use in a marketing strategy for small and medium sized business.

What do the letters in SWOT stand for?

S – Strengths
W – Weaknesses
O – Opportunities
T – Threats

Whilst a SWOT can be used on its own, it is important to know that your SWOT feeds into your marketing strategy which should feed directly into the goals and objectives of your business. If you find your marketing strategy does not fit the goals and objectives of your business, then you should not be doing it – you need to take another look. A SWOT can help you take a deeper look at your business. You can conduct a SWOT analysis at any time but it’s a good idea to at least do so annually.

A SWOT analysis should be used to analyse each of these four points of your business. Your SWOT and ultimately your marketing strategy will identify your businesses:

Strengths – that you want to keep, build on, grow.
Weaknesses – that you want to reduce, eliminate, outsource, pivot, or improve.
Opportunities – you want to build on, plan for and implement.
Threats – you want to be prepared for, to minimise disruption and impacts.

I always use a SWOT analysis to understand the strategic marketing of a business. When I use a marketing SWOT analysis, I often take into consideration other areas of the business such as customer service or processes as these can all impact your business marketing.

Typically, the Strengths and the Weaknesses represent the internal factors of your business. The Opportunities and the Threats are external factors that may impact your business. These can be positive or negative factors.

Once you have completed the SWOT analysis, you should be able to assess and prioritise several opportunities that will align with your business goals.

DO YOU HAVE TOOLS OF TRADE?

Do you have tools you use in your business? Tools that you could not do without. Think of a SWOT analysis as a tool of trade, like a hammer for a carpenter, a computer for an IT specialist or a lancet for a surgeon.

When I was five my dad taught me how to use a hammer. Without his careful instruction I would not have been able to use the hammer properly. I would always be hitting my thumb or bending the nail. If I didn’t listen and learn how to use a hammer my piece of timber would never join to another piece and my little project would have failed.

If you want to build a house, fix a computer glitch, or operate on a patient you need to know how to use the tools.

Conducting a marketing or business analysis is all about knowing how to use the tools properly. If you don’t know how to use business analytic tools, whether that be conducting a SWOT analysis, using data insights or competitor research, you can end up with analysis paralysis or a ‘now what?’ scenario.

Let’s learn how to use and how to apply SWOT as a business tool.

HOW TO USE A SWOT ANALYSIS

You may have seen the typical SWOT analysis as a four squared box (image above). I personally like to use two columns. My first column is the analysis of each area of Strengths, Weaknesses, Opportunities, Threats. The second column begins the assessment. It is the ideas, thoughts, potential strategies or opportunities that come from each point in your analysis. This column can be called Mitigating Ideas but you can call it potential opportunities or whatever fits your business.

STEP 1: In the left column, start with a brainstorm and collation of all the feedback, research and data to complete each S, W, O, T section. Depending on the size of your business, do your own brain dump of information, first. Then brainstorm with your team, other colleagues in other departments, with your family, your friends, your customers, suppliers and perhaps even your competitors.

STEP 2: Add to your brain dump factual information. You will need to pull in data from several sources to assist you, such as: web analytics, social media insights and comments, reviews, qualitative and quantitative research, competitor websites, publicly available industry information, economic research and data. Work with data you readily understand to avoid analysis paralysis.

STEP 3: Use numbered bullet points to keep track of each piece of analysis. The numbering will help organise your thoughts during the ideas and assessment phase of potential opportunities.

Remember: BE HONEST or this exercise is pointless, and you will not maximise the potential of a SWOT Analysis.

How to Complete A SWOT ANALYSIS?

Ask Questions? As you look at your data and research you will find many questions. The following questions will help you get started:

How to Complete the Strengths section?

What do we do well and are good at?
What do we enjoy doing? Why?
Are our core values adding value? Are they strengths or weaknesses?
What tools do we have in place to reach our goals?
What skills and resources, etc do we have to achieve our goals?
What makes us stand out in the marketplace?
What has made us succeed in the past?
Why do our staff and customers like us?
What makes us profitable? (Are we profitable?)
What is unique about us?
Is our why (we are in business) working?
What are our customers saying are our strengths?
Why do our customers come to us?
Are we attracting quality, valuable customers?

How to complete the Weaknesses section?

Where can we improve?
What are we not doing so well? Why?
Are we getting quality leads, sales?
Are we retaining our customers? Are they going to our competitors?
Are people staying on our website or going elsewhere?
How do we believe we could do better?
Where are the bottlenecks in our business (whether that be cashflow, staffing etc)?
Ask your customers questions and actively listen to their feedback. (This will help you determine how you can improve on those areas or remove those areas completely).
You may want to break your weaknesses down into areas of your business eg your location, your physical evidence, your product, your people, your processes, your IT infrastructure.
A strength can also be a weakness – consider the opposing impacts.

How to complete the Opportunities section?

What have we seen that works well externally with competitors?
What differentiates our small competitors to some of our global competitors or global aspirations?
What are the industry trends locally and globally?
Are we working smart or working harder?
What have we seen in other industries that might be useful in ours?
Talking with your customers, suppliers etc may give you a new insight that you may have not considered in the past.

How to complete the Threats section?

What is happening in the economy that threatens us from achieving our goals.
What is happening with our competitors that we may also be doing and is not working so well?
What regulation issues or legal issues maybe on the horizon?
What contingency plans are in place in the business?
What threats may affect our suppliers or customers? (We have all seen with the effects of bushfires and Covid lockdowns globally).
Create a list of the issues that impacted your business during the pandemic. What are ways to mitigate these issues/obstacles in the future?

NOW What? Avoid Analysis Paralysis

You have completed the analysis. Now it is time to start assessing each numbered bullet point. Use a structured assessment criteria such as SMART Criteria. SMART can be used for goal setting as well as assessment. (To find out more about how to use SMART look at this article from Business Australia).

The purpose of the second column is to create potential mitigating ideas or opportunities to correspond with each numbered bullet point from Column One. Ultimately, you should be able to have a mitigating idea to match every point from the analysis work of Column One.

Think, ‘what can we do to improve or remove this issue?’ A brainstorm with others, your suppliers or customers may help (reward them/thank them for helping you).

With your long list of potential mitigating ideas and opportunities, you need to look for similar opportunities, as some of your mitigating ideas may be the same as others. Group similar numbered points to avoid duplication. You may find that these duplicate points are significant areas across your business and a regular pattern appears. I find it easy to print out the list, cut out each bullet point and start to form comparable piles.

Once I have formed the piles, I begin to prioritise them for further assessment as a High, Medium or Low priority. To do this, first determine your prioritisation criteria. Ask how specific the opportunity is? Can we measure these opportunities? Are they realistic? Do they fit our business goals? How long will they take to implement?

At some point you may need to undertake further detailed impact analysis on cost, resource, customer service, processes etc. All businesses have limits with their cashflow, operations, systems, etc.

I recall one particular strategy meeting, in a corporate organisation, where the business SWOT analysis generated over 200 ideas to generate new growth. Many ideas could be quickly dismissed using basic assessment criteria and sitting in a room of departmental experts from IT, Finance and all areas of Operations. We even set a 3-minute timeframe for each idea so that we moved through the list efficiently and prevent people going off on tangents. Anything that required more detail went for further impact review at a later time.

Ultimately, I would suggest picking 3 to 5 strategic opportunities – some for the short-term, others medium-term or longer term (5 to 10 years). Remember you can always come back to your SWOT analysis and reassess it in six or twelve months to determine if you’re on the correct path.

I want to emphasise that you ensure your marketing SWOT output marries up with your business goals. You may need to consider tweaking these goals and objectives. Marketing strategies that do not align with your business objectives can cause a few problems including procrastination, a waste of resource and ineffective marketing

All of which cost your small business valuable time and money!

What should not change, is your core values. Your core values typically give your business its unique selling proposition and often these are the values that drive you in your small business. That is, what makes your business unique and why someone will buy from you rather than your competitor.

Do I need to use a SWOT ANALYSIS?

I know some people doubt the ability of a SWOT analysis and its relevance today. If you are not convinced as to why you should be using a SWOT, here are 15 important benefits that may come from using this tool:

Helps you understand your business strengths and competencies to continue to grow your business.
Highlights your weaknesses and what may be lacking.
Highlights where you need to remove or improve inefficiencies.
Improves the chances of strategic success by creating short and long-term opportunities for growth.
Keeps you industry and business aware.
Identifies new opportunities and provides focus on existing opportunities.
Objectively, you can actively listen to your customers and suppliers.
Reduces your chance of business failure. Research suggests businesses with a strategic plan are more successful than a business without a plan.
Can highlight and remove problems that you may not have been aware.
Can highlight potential threats in the market.
Separates you from your competitors by identifying your unique selling position.
Creates opportunities and strategies that will grow your business today and in the future.
Aligns and adjusts your business goals and objectives.
If you inclusively involve your staff, your customers and suppliers it can increase loyalty, trust and dependability to your business.
You are prepared! Which may give you an edge over your competitors.

Finally, it is important to:

Stay objective during your analysis or the tool will be ineffective, and you may be missing out on opportunities.
Be cautious of analysis paralysis or the ‘Now What’? scenario.
Follow your SWOT Analysis with an assessment against your business criteria.
Keep your core values, business goals and objectives in mind.

About Leanne Di Fazio

Leanne has over 25 years marketing experience in large corporates and small business in Australia and the United Kingdom. She is passionate about helping small business grow and thrive. Leanne is the founder of Look Deeper Marketing specialising in marketing, strategy and planning for small business. Look Deeper Marketing bring affordable marketing consultancy to small business in Sydney and surrounding areas, with packaged options so you know exactly what to expect. Leanne offers affordable packages for SWOT and Competitor Analysis. Look Deeper Marketing can help you take a deeper look at your marketing.

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