SWOT is an acronym, which stands for Strengths, Weaknesses, Opportunities and Threats. SWOT can be your best friend. SWOT can help you make better decisions in both your personal life and your professional life. A SWOT Analysis helps you:
•Convert weaknesses into strengths
•Determine what you are doing right
•Determine what is important
•Make better decisions with your time
•Get a strong start to the week
SWOT is not my idea. SWOT was born in the 1960s at Stanford Research Institute. Corporate leaders were puzzled why corporate planning failed. They asked Stanford Research Institute for a solution. They asked SRI:
•Why does corporate planning fail, and
•What can be done about it?
SRI developed this analysis that has since helped countless companies and organizations reset their priorities and become more successful.
I started doing SWOT Analyses on Friday afternoons when I looked at my schedule for the following week and didn’t know what I would be doing. SWOT helped solve that. I will use two companies to help present the SWOT Analysis. I do a SWOT Analysis for Pete’s Plumbing in my first example. I changed his company name and location, but the issues are still intact.[i]
Pete has been a plumber for 30 years. On the Good side, he has a long list of satisfied and loyal customers. He has a great reputation. On the Bad side, Pete is old school. Pete does not have computers in his office. He still advertises in the yellow pages and does not know what social media is. Pete knows that some new developments are happening in his county and the developers are getting SBA loans. He also knows the local big box retailer is reselling services from another plumber. Pete has unreliable cash flow and he senses that his competitors, as well as the industry as a whole, run their businesses more efficiently than he does. He thinks he cannot compete against younger plumbers. They use computers.
Pete needs a SWOT Analysis and can follow these questions from my SWOT Analysis presentation.
•Strengths: What are you doing right?
•Weaknesses: What are you doing wrong?
•Opportunities: What deserves your time, energy and attention?
•Threats: Where are you vulnerable?
Strengths and Weaknesses are opposite sides of the same coin.
Pete identifies these Strengths:
•Long list of satisfied clients
Pete identifies these Weaknesses:
•Social networking =?
•Yellow pages marketing
•No computers in the office
He can turn Weaknesses into Strengths. Pete does not use does not utilize social networking. He thinks ads in the yellow pages will bring in new business. He has no computers. Pete needs to hire me.
Within a month, he can convert these Weaknesses into Strengths. He can have a decent social networking presence and understand how social networking will help him attract new customers and retain current customers. He can abandon the ineffective yellow pages ads. He can run his business more efficiently on a new, highly-reliable computer network. He can do this work himself or he can contract out this work. Either way, Pete’s business will be stronger. Pete will have to find more Weaknesses that he can convert into Strengths.
Opportunities and Threats also warrant your attention. Pursue the opportunities. They won’t last forever. Somebody else may pursue the same opportunities you identify and gobble them up if you are too slow.
Pete identifies these Opportunities:
•Remodeling is on the upswing
Pete knows developers are converting abandoned warehouses into residential lofts. Demand is strong. Developers cannot complete these conversions fast enough. He knows developers are obtaining SBA loans to finance their projects. Pete can contact them for more work. They need plumbing subcontractors; a plumber with 30 years’ experience should fill that need.
Pete identifies these Threats:
•Big box retailer has plumbers
•Others use computers
•Unreliable cash flow
Pete knows people are buying water heaters, refrigerators, freezers, washing machines and dryers at the local big box retailer. People ask for a good plumber and the retailer schedules a plumber to install the appliances. It’s not Pete. He also thinks his younger competitors run their businesses more efficiently because they have computers and better planning. This threatens Pete’s livelihood.
Pete realizes Opportunities are Threats that need 10 seconds of thinking. He can approach the big box retailer and ask them to resell him. Pete has 30 years’ experience. The younger plumbers don’t. This Threat is actually a Golden Opportunity.