What is SWOT Analysis
Whether you're an online influencer, a web retailer or a candlemaker, if you do business online, it's important to have a complete working SWOT Analysis for your brand.
But just what is this analysis, why does it matter, how do you do one, and how often should you look at it?
SWOT stands for strengths, weaknesses, opportunities, and threats. The technique was created by Stanford University researcher Albert Humphrey in the 1960's. Humphrey studied hundreds of fortune 500 companies in an effort to understand the corporate planning process and how and when it failed the corporation. Originally, the acronym was SOFT and was defined this way: “What is good in the present is Satisfactory, good in the future is an Opportunity; bad in the present is a Fault and bad in the future is a Threat.” Eventually, SOFT became SWOT, and SWOT became a go-to tool for corporate success.
This planning tool is a way to collect data that measures a company's ability to meet a certain goal, and the factors that might interfere with meeting that particular goal. There are many different graphic or textual ways to represent an analysis of this type, but the most important factor to keep in mind is that this tool is for data capture and is part, but not all of your strategic planning process.
Because SWOT is a method of gathering information, it's important to pull together a team of as many stakeholders as possible to help with the process. For website owners, this could include everyone from the web developer, your sales team or customer service contractors, your graphic designer, or even your marketing rep or team. These people need to be prepared to give their honest opinions and not worry about trying to 'stay positive' or aspirational. SWOT allows you to take a snapshot of your business 'as-is', so the more straightforward your team is, the more useful you will find the analysis at the end of the day.
Another key thing to keep in mind is the context in which you operate or your specific niche. You will have to evaluate the things you do as well as the competition and the things you don't do as well as competitors. In order to do this accurately, you must understand who the competition is and how much you compete directly for the same market. This might mean you have to do a little homework before getting started.
Once you are ready to begin, start by making sure your entire team is on the same page about what you are going to do. You are taking an honest look at the internal and external factors that either help or hinder you from achieving a particular goal. That goal should be clearly articulated and commonly understood by all participants at the onset of your session.
There are many ways to set up a SWOT Analysis, but this is probably the most straightforward way for beginners to use. Using a sheet of posterboard or large notepad paper, create a large grid with four squares. Across the top, write the words 'strengths' and 'weaknesses'. Down the side, write the words 'opportunities' and 'threats'. Now you are ready to begin your brainstorming session.
SWOT - Strengths
Strengths are the things that are within your company's direct control that will help you to meet a certain goal. For your website, a user-friendly e-commerce system or valuable content could be examples of strengths.
SWOT - Weakness
Weaknesses are things within your direct control that you don't do as well as your competitors or that stand in the way of your meeting a particular goal. For example, if you have a complicated customer reward program that no one understands how to enroll in, that would be a weakness.
SWOT - Opportunities
Opportunities are positive factors that could assist you in reaching your goals but are not within your direct control. For example, we now know that nearly two thirds of online purchases are being made on a mobile phone, so that could create opportunity for your site to capture more mobile users. However, smart phones could become a thing of the past next year and some new form of technology could supplant them. You don't control technology, so this is not a strength, just an opportunity.
SWOT - Threats
Similarly, factors that could hinder you from accomplishing a stated goal which are not within your direct control are called threats. For a limo company, rideshare services like UBER and LYFT present a significant threat to their industry. In the same way, security breaches and public policy can present a significant threat to your website, since these things exist outside of your control and are subject to change at random.
Preparing a Strategic Plan
Set a time limit of fifteen to twenty minutes for your team to brainstorm. Write down every potential strength, weakness, opportunity, and threat you can think of. Next, take some time as a group to come to agreement on which listed items are accurate and inaccurate, and to make sure you have noted everything in the proper place. Once you have used the process to create a snapshot of your website as it is in this very moment, take another twenty minutes to write out a second SWOT on future strengths, weaknesses, opportunities, and threats.
Place the two documents side by side. Ask yourself and your team, how well are we planning for future contingencies? At what rate are we improving on our weaknesses? What is a weakness today that could be a strength in the future? Designate a scribe to take detailed notes on your brainstorming process. Eventually, these notes can be expanded into an outline for your organization's strategic plan.
Because of the constantly evolving nature of e-commerce and technology in general, website owners should probably conduct a SWOT Analysis once or twice a year. By getting in the habit of thinking intentionally around factors within and outside of your control, and thinking critically about what areas your competition out-performs you in, you not only will be more likely to find financial success, but you will also become better at spotting potential issues before they happen, an invaluable asset for all business owners.
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