By Ed Rappuhn, Chairman – SCORE Nashville
“New competition has entered my market – my profits are slipping. Any ideas?”
By asking this question, you are working on your business, not just in your business. Too many entrepreneurs get so caught up in the day-to-day operations of the business they fail to look at the big picture.
I recommend doing a SWOT analysis on your business. By conducting a SWOT you can analyze your internal strengths (S) and weaknesses (W) and external factors defined as opportunities (O) and threats (T).
You must be impartial and honest in doing your SWOT; look at your business from an outsider’s perspective. Let’s look at each part of the analysis.
Starting with strengths, look at internal factors that are particularly strong. Is your product or service priced better than the competition? Do you provide more personalized service? Is delivery faster? Is there a better warranty or guarantee associated with what you do? Hopefully you can answer, “yes,” to one or more of these questions.
Next, consider weaknesses. In answering the questions above, you have probably identified at least one weakness.
Other factors that might be internal strengths and weaknesses are:
- Selling skills
- Web site and search engine optimization
- Marketing and promotion effectiveness and budget
- Accounting systems and understanding of results
- Employees’ skill and dedication
- Name or brand recognition and perception
- Research and development
External opportunities and threats are next. These are factors outside of your control.
Opportunities might include a growing market for your product or service. For example, if you serve the senior market, that market is expected to grow over the next several years. A new business moving into your area could provide opportunities as a buyer of your product/service or its employees might be potential customers.
Threats might include competition moving into the market. A major disaster such as Nashville’s 2010 flood was a threat many businesses did not consider. Ironically, this was an opportunity for some businesses such as contractors and home supply retailers.
Other potential opportunities and threats include:
- Political decisions
- Technological changes
- Environmental issues
- New markets
- New complementary or competitive product/service introduction
You can do a SWOT analysis for your company or for specific products and/or services. Additionally, perform a SWOT on your competitors. Look for areas where you have a unique competitive advantage that you can emphasize.
Can you improve upon your weaknesses to bring them to a neutral or even a positive status? If so, do it. If not, that’s OK. You conduct the analysis to better understand your business. The winner of the Super Bowl doesn’t need to have the best player in every position. They simply understand their strengths and weaknesses and work their game plan accordingly.
Whatever the results, if you were honest in your assessment, you stand a much better chance of success by knowing where to focus your efforts. Use this analysis to help you plan the future direction of your business and set achievable goals and objectives.
SCORE mentors can look at your business from an outside, impartial perspective and help you with your SWOT analysis. Sign up for a free SCORE mentor, find out about our reasonably priced workshops and other services, or volunteer to become a SCORE member atwww.scorenashville.org. Email questions about starting or growing your business firstname.lastname@example.org and watch for the answers in future columns.