An important aspect that many business ower’s forget to research is competitor analysis. Everyone has competitors, so don’t fool yourself into thinking you don’t. Even if your competitor doesn’t sell the same product or offer a similar service, could a potential customer choose a substitute? Buyers almost always have a choice so like it or not you have competitors; Capital Cents will teach you a quick and easy way to gauge yourself and your competitors.
A SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats and it can be used to look at your competitive landscape. A word of warning, you must be able to look honestly at your business, take an outsiders vantage point or hire an outside consultant to help.
Start your SWOT analysis by taking a blank piece of paper or Word/PowerPoint document. Now label it with your business name at the top, next draw a line down the middle from the Top to Bottom and another line from Left to Right. Now you have four boxes with the name written of your business written on top. Similar to this…
Strengths and Weaknesses are internal to your company or if you are analyzing this from a competitor stand point (pretend you are sitting in your competitors shoes). In the Strengths section list several things your company does well or has a competitive advantage in, things that your competitors would like to mimic or do better than you. Weaknesses are things your company needs to work on such as a weak brand or poor management. Take an honest look at your weaknesses, it can be very tough for a business owner or manager to make an accurate list of weaknesses .
Now you are ready to move on to the extrenal factors, Opportunities and Threats. Opportunities are anything that you can’t necessarily control but can potentially exploit. A few examples would be is the government about to provide a stimulus in the way of cash or tax breaks for a certain product or service, what about a new distributor that you know is about to offer a new product, a final example to think about is new technological advances that could save you money or time. Think about a Threat as something that could potentially cause some serious problems to you and your company. Do you believe a competitor has a pricing advantage (lower price point and more room in their margins), new unfavorable taxes for your product or service, or your customers are shifting away slowly to a better product or service.
With this information you can start to see different areas you can exploit to your advantage or plug a glaring hole in your company. Another word of caution two people in your company could potentially come up very different SWOT analysis, so keep that in mind. However, at least you have taken the first step to begin to understand your companies position as well as that of your competitors.