SWOT Analysis: Strategic Planning for Small Business Success

Unleash your small business's potential with the right tools! Listen to Ed Drozda, The Small Business Doctor explain how SWOT Analysis can be an invaluable asset in strategic planning. #SWOT #BusinessTips #Podcast

Transcript

Ed Drozda: 0:10

Welcome to The Water Trough where we can't make you drink, but we will make you think. My name is Ed Drozda, The Small Business Doctor, and I'm really excited you chose to join me here as we discuss topics that are important for small business folks just like you. If you're looking for ideas, inspiration, and possibility, you've come to the right place. Join us as we take steps to help you create the healthy business that you've all. Always wanted. Welcome back to The Water Trough. This is Ed Drozda, The Small Business Doctor. SWOT Analysis. Now, I'm not talking about swat as in swatting mosquitoes, and flies, and things like that. I'm talking about the S-W-O-T analysis; strengths, weaknesses, opportunities, and threats. It's an analysis that's been in vogue since the 1980s, although its predecessors date back probably to the 1950s. In the interim, there's been a lot of discussion about the validity of the tool as well, how it's utilized and if it really is worthwhile and what it leads to. But for the moment, let's just consider SWOT Analysis for what it is and what it might be able to do for you. It's a concept that we teach in business school. It is a concept that simplifies preparing for strategic planning. It is not, in and of itself a strategic plan. It is a way of bringing together bits of information that can be valuable in creating a strategic plan. So let's look at each of the individual components. The first of these is the S; S as in strengths. When we talk about strengths, I imagine a lot of things come to mind. For example, we might think of the things that we do very well. We might think of things that we are very capable of doing. We might look at our most outstanding accomplishments. These are strengths. Strengths are things that we typically identify to showcase our value, to showcase our worth. Generally speaking, we look at strengths as being a positive thing, but we can't forget that strengths can in fact be a negative thing. Sometimes our strengths are overpowering, overwhelming, and they can interfere with our intention and our expectations. But for the moment, let's look at strengths as if they are positive things that we consider a value and that we believe demonstrate our value as well. The second of the four elements of SWOT Analysis are weaknesses. Weaknesses are things that we consider our shortcomings, things that we look upon as places for improvement, things that we could do better, things that we understand or don't and are willing to take steps to improve upon. We tend to look at weaknesses, not as shortcomings, but as things that can be made better. Let's move on now to opportunities. Opportunities are things that are available to us. They could be things both within the organization and outside the organization. Things that we could improve upon in the organization that will catapult our performance, our productivity, and our revenue could be considered opportunities. Outside of the workspace, opportunities could come in the form of new business clientele, in things such as new technology, which can lead to innovation and a better way of doing the business that we do. So opportunity can be both internal and external to our organization. The fourth element of the SWOT Analysis is threats. Threats are those things that can have a negative impact upon our business. Threats as opportunities can arise both within and outside of the organization. Within an organization, a threat might be failed communication that has led to the prospect of a strike in a union shop. A threat might be a change in regulations that's going to impact the way that we're able to ship our product overseas, i.e., the tariffs in the current environment. These are threats. Sometimes they are forced upon us, sometimes they're things that arise from within. In either case, they have the potential to have a negative impact on our business operations. The fifth and arguably the most important component of SWOT Analysis doesn't have an initial. That fifth component is analysis. What do we do with the information that we have put together here? We've identified strengths, weaknesses, opportunities, and threats. But how do we utilize these to help us in strategic management, in creation of strategic plans? Let's start by saying that the information that we derive tells us a lot about the current condition of our business, about the readiness of our business, about our potential, and about the things that we need to keep our eyes on. Oftentimes, we say, do more of the same thing. If it's good. And mitigate the effects of those things that aren't so good. That can include our strengths, our weaknesses, and the opportunities and the threats. So how do we analyze this information in a useful way to help us build a stronger, more resilient and profitable business?

6:22

The answer to this question is beyond the scope of a brief podcast such as this. So rather than trying to get into the full details, I'll start by saying that the elements that you've taken the time to uncover in the SWOT Analysis are in and of themselves incredibly valuable. Depending upon your organization, how information is disseminated, how it's processed, those things will give rise to the manner in which the information will be utilized. In an organization with multiple departments, it would be ideal that the elements of the SWOT Analysis are identified for each department, and that once the information has been collected, that the information be given an initial review by the department, head or manager, whatever the case might be. And then collectively, the information is looked at with senior management, identifying commonalities and threads among the various departments and facets of the organization. As with any strategic management or strategic planning endeavor, it is necessary that an organization opens up all potential communication channels. It is not sufficient for the senior management to work in a vacuum. It's absolutely imperative to bring in the various managerial components of the departments within the organization. Even in a small organization that may not have such managerial stratification, it's critical that all key players, that as players with a responsibility for specific components of the business are brought together in the strategic planning process. Reviewing the SWOT elements is a very important step in developing a strategic endeavor, in developing a strategic plan. Taking these elements into consideration will allow a much more clear picture of what is going on and will help to stage the business for appropriate planning that will lead to the expected, the desired outcome. Remember, SWOT Analysis is not an end all. It is a tool in your toolbox that can be used in the development of strategic plans. It is a tool that can be used for ongoing surveillance and maintenance of business operations. It doesn't only have to be used for strategic planning. It is a tool that is designed to give us information, which will then lead to more in-depth analysis. That, in turn, will lead to further answers. This is Ed Drozda, The Small Business Doctor. I hope you've enjoyed this little conversation about SWOT Analysis, and I hope that you'll find it useful in your business operations. Until we meet again here at The Water Trough, I wanna wish you a healthy business.