Successful businesses conduct thorough research before coming up with new product ideas or penetrating new markets. Different kinds of research need to be done to help entrepreneurs steer the company in the right direction.
One way to sum up all kinds of research is to frame them into a SWOT analysis. SWOT analysis encompasses the different segments an enterprise or an entrepreneur needs to get information on to build an effective and sustainable marketing plan.
What is a SWOT Analysis?
SWOT analysis is a complete analysis of the environment in which a business needs to operate. It involves looking into all the internal and external business stakeholders and steering your way through them for generating sales. It is a strategic planning technique that equips a business with the assessment tools it needs for setting up its goals and the action plan to achieve them.
The term SWOT stands for strengths, weaknesses, opportunities, and threats. Let’s look into each one of these elements of a SWOT analysis one by one.
These include all those things that are an advantage for the business at the beginning. These can also be factors that a business attains or builds as it survives, thrives, and grows. These have to do less with the surroundings or the competition and more with the entrepreneur’s expertise and other internal factors.
Examples of a business’s strengths could be as follows.
Skills and expertise of the company’s employees that keep up the productivity levels
Well-research market insights gathered and organized by the marketing team
A healthy corporate environment in the company’s premises that keeps the staff motivated to work at their best
Any business needs to work efficiently in the face of the global competition that almost every industry struggles with these days. These strengths help a business in maintaining its efficiency levels and keep up the momentum for growth. That’s why the first part of a SWOT analysis identifies a company's strengths and leverages on them as much as possible.
The weaknesses of a business are those factors that become hurdles in its growth and pull it back in its path towards achieving its objectives. These are not to be taken negatively because identifying them helps a business improve them and eliminate all its flaws. That’s why pointing out the weaknesses of a company is the second part of conducting its SWOT analysis.
Examples of a business’s weaknesses could be as follows.
Lack of quality human resources to take on specialized tasks
Low budget available for executing extensive marketing campaigns
Poor infrastructure within the locality of the business
A very small or non-existent loyal customer base
No concrete social media footing for your brand
Companies can turn weaknesses into strengths if they put in the time and effort to mold everything they lack into expertise.
This part of SWOT analysis has more to do with the outer surroundings of a business. The market that a company operates in always has specific opportunities to offer for business growth. It depends on the business owners and managers to identify these opportunities and tap into them.
Opportunities can arise from a new market trend, a new consumer problem identified via empathy marketing, a technological breakthrough, or an economic downturn. Any way the external environment of a business presents itself in the form of a benefit, it is best to make use of it before the competitors. Smart business people, who know how to do SWOT analysis properly, are always up to date with the changing market trends for this reason. They are ever-ready to tweak their marketing campaigns, make changes in their production processes, and accept feedback from customers regularly.
One way to have a keen eye for any opportunities is to provide good customer service, which helps collect daily user feedback. If you run your business through a website, the best way to offer customer support is live chat. At Strikingly, we offer 24/7 live chat support to all our users as well as site visitors.
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These are factors in a business environment that can potentially cause harm or loss to the organization. Examples of threats could be as follows.
Increasing competition and showing up of product substitutes in the market
Tight labor supply
Weather conditions that are not favorable for the business
Why do a SWOT Analysis?
Now that you know what a SWOT analysis is, you must have understood why it’s essential to do a SWOT analysis for business. Below are a few reasons that make SWOT analysis so crucial for the survival and growth of your business.
1. Take Advantage of Your Strengths
Once you know your business's strengths by doing a SWOT analysis, you can be at a better place to cash on each of them. You realize that your employees feel very motivated and happy to work if you organize a vocational trip for them every month. If the trip’s expense is less than the increase in productivity it causes, wouldn’t it be a great idea to maintain the trip each month? Now imagine you didn’t take out the time to measure this cause and effect. Then you would never know about this effective way to maintain and enhance the productivity of your business operations. Identifying the strengths as part of your SWOT analysis helps you to build up your strengths.
2. Be Ahead of Your Competitors
SWOT analysis forces you to spot any opportunities in the markets you are targeting. If you can identify your business opportunities earlier than your competitors, you can penetrate more markets and fill in more market gaps. This means you can stay ahead of the competition by simply being alert and knowing what’s going on in your surroundings. For instance, the current pandemic has been an opportunity for many businesses to start online operations. If you run a coffee shop business or a restaurant selling grilled food, let’s say you could be the first one to build an awesome website that allows you to take orders for your coffee or meals over the internet.
Sometimes, a business needs to conduct a SWOT analysis to address individual or isolated issues. These individual issues can be one or more of the following.
Problems in finding the right people for the right tasks, i.e., staffing issues
Demotivating business culture, i.e., issues of low morality of employees
Technical errors or quality control issues in product development
Weak or inefficient communication chains in an organizational hierarchy
Outdated market research results and lack of feedback from customers
Notice that these issues can also occur concurrently in a business but are not always interrelated with each other. It is also possible that when you do a SWOT analysis, you find out that a strength of one of your business departments is becoming a weakness for another. For example, a customer’s complaint that upsets you could potentially present itself as an opportunity to launch a new product line or make a valuable product line extension.
SWOT analysis can, therefore, address issues individually and identify how you can turn a problem or weakness into a strength or an opportunity.
4. Get Ideas for Improvement From Competitors
When you look into your competitors’ pricing strategies, quality control measures, and customer support services, you get ideas on how to improve on these aspects of your own business. SWOT analysis requires you to keep an eye on your competitors’ activities at all times. Therefore, it helps you keep on finding ways for improving your business both internally and externally. Doing SWOT analysis for business enables you to incorporate the concept of continuous improvement.
For instance, you notice that one of your competitor’s websites makes many sales, even though your landing page looks as appealing as theirs. When you do a SWOT analysis and research a little more, you find out that your website’s bounce rate mostly comes from your checkout page. As a result, you observe your competitor’s checkout process and notice how precise and straightforward it is. So you learn that customers are more comfortable in filling up more simple checkout forms. Later you revise your checkout page and make it as simple as your competitor’s. You observe a rise in your sales. Bingo! You just identified a way to improve an aspect of your website that caused your online sales to rise.
This is how you can use SWOT analysis to benefit your business. By the way, if you are looking to build a website for your business for showcasing your products or making online sales, you can check out Strikingly.
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Strikingly is a very simple-to-use website builder, enabling you to create a website on your own and launch it within a day. We support our users in all possible ways, whether by providing live and instant customer support or instilling features and tools in the Strikingly editor that help you design and edit your site effortlessly.