ZACH DE GREGORIO, CPA
The most commonly talked about business tool is the SWOT analysis. If you go to business school you are going to do a lot of this. But what I have seen, is when most people do SWOT analysis, they miss out on a very important step. That is what we are going to talk about in this video.
First, let us talk about what it is. SWOT analysis is a tool in business strategy to help you understand your business. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. You will take a piece of paper, and split it into four sections. Each of the four sections you label as Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses are things internal to your organization. Opportunities and threats are external to your organization. This activity should give you an understanding of both your company and the overall market.
The problem with SWOT analysis is that it just becomes a listing exercise. People sit down and make a long list of their Strengths, Weaknesses, Opportunities, and Threats. The problem with this list is it does not tell you what your business should do. The point of business strategy is to figure out what you are supposed to do, and a list does not give you any action.
I want to suggest, there is another step to the SWOT analysis. In last week’s video, we talked about celebrating your unique qualities. Business strategy should help you figure out what makes you unique, because that is what will make you successful. After you have created your SWOT analysis, and you have your list, go back through and circle the things that make you unique. For example, if you listed as a strength, a piece of technology, and your competitors all have the same technology, then that is not really a strength. You want to identify things you can do, that your competitors cannot. That is where you will stand out in the market.
So that is my recommendation. Perform your SWOT analysis, but after you create your list, perform the final step of narrowing that list down to the few areas that make you unique. Once you have identified your unique qualities, all the action steps in your strategic planning document will flow naturally from those areas. This is the objective of business strategy. You are identifying the few areas where you can dominate the market. The more you can focus your company’s activities in those areas, the better you are going to perform.
Neither Zach De Gregorio or Wolves and Finance Inc. shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.