According to the U.S. Small Business Association, roughly 50% of all businesses fail within their first year. There is no shortage of “Top Ten Reasons Why Businesses Fail” lists so I won’t go into that here, and I’m sure you could name many of the main culprits—poor management, lack of capitol, insufficient marketing, flawed business plan, etc.—without having to run a search or buy a “How to Succeed in Business” book. What I will talk about is how to avoid the common (and sometimes harder to find) missteps, mistakes, and missed-the-boat opportunities that can determine if your company sinks or swims.
If you’re one of the “lucky” ones who makes it to Day 366, don’t think for a nanosecond that you’re out of the water and are now one of Darwin’s success stories. Far from it. The truth is, your battle for survival has just begun. You’ve figured out how to stand on your own two legs, but now you need to learn how to not get knocked down.
"In the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment." ~Charles Darwin
No matter how unique, innovative, creative, or “original” your product, there will always be competition that is vying for your customers. And you know what—that’s a good thing. Competition triggers our will to exist and reminds us that it is truly survival of the fittest.
The key to survival—whether it be in the “real” world or the business world—is to have as much information as possible. Not only about your opponent, but about yourself. That’s where SWOT comes in.
SWOT is an acronym (another handy tool created by man to boost efficiency and increase curability) that stands for Strengths, Weaknesses, Opportunities, Threats.
SWOT provides the guidelines for critically assessing what you’re doing right, what you’re doing wrong, who or what can take you down, and what you can do to get—and stay—ahead of the pack.
And it’s not just Darwin who subscribes to this theory.
“He who knows others is wise. He who knows himself is enlightened.” ~ Lao Tzu
In most cases bragging is looked upon as a bad thing. For this exercise it is highly encouraged. It’s important you have a clear recognition of the places where you and your business excel, but not just to give yourself a pat on the back. It’s crucial that you are aware of what you do best. Pediatricians don’t perform heart transplants, Shaquille O’Neal doesn’t shoot three pointers, and Quentin Tarantino doesn’t make G-rated movies. Why? Because they all know what they can do well and play to their strengths.
Key “Strength” Questions
- What’s the best part of what I do, and what do I do best?
- Why do people engage with my product?
- What gives me the greatest sense of accomplishment?
“Our strength grows out of our weaknesses.” ~ Ralph Waldo Emerson
Bad news—you’re not perfect. Good news—that means you can always improve. Better news—the worse you are at something, the more room for improvement! This isn’t a “glass half full” perspective, it’s just the reality of things. Negatives can be turned into positives, but first you need to figure out what they are. Before you start making your list of shortcomings, make sure you’ve got your old pal Honesty by your side and kick Humility out to the curb. There’s no room for excuses, partiality, and beating around the bush. Without a 100% forthright and straightforward audit, you’ll never be able to optimize your business, and more importantly, survive.
Key “Weakness” Questions
- What can I do better?
- In what areas do I receive the most complaints (from consumers or employees)?
- Am I spending money on something that isn’t necessary?
"In the middle of difficulty lies opportunity." ~ Albert Einstein
Don’t get too discouraged now that you’ve unearthed all the not-so-good things you do. Weaknesses are often what give opportunities the reason to come knock on your door in the first place. One definition of opportunity is “a good position, chance, or prospect, as for advancement or success.” No matter who you are or what you do, there are always opportunities for you to succeed—the trick is to find and take advantage of them.
Key “Opportunity” Questions
- Is there a particular demographic or market that would like my product that I’m not reaching?
- What direction are consumer trends moving, and can I get ahead of the curve?
- Can I capitalize on any of my competitions shortcomings?
“As a goalkeeper you need to be good at organising the people in front of you and motivating them. You need to see what's going on and react to the threats. Just like a good manager in business.” ~ Peter Shilton
Who would have thought that a World Cup soccer goalie from England would provide such sound advise for CEO’s? Like a penalty kick from Leo Messi, he couldn’t be more dead on. There is another acronym you should remember which will help you to asses your greatest threats and make sure you have the means to thwart them off—RPI:
1. Recognize the threat
2. Plan a course of action
3. Implement your plan
Seems like common sense but you’d be amazed at how many businesses cease to exist because they failed to take the necessary time to follow these steps.
Key “Threat” Questions
- What “shelf life” do I have for my product to be relevant?
- What are the main factors causing my cart abandonement(or churn rate, or negative feedback)?
- Is there another company with a similar product that could potentially draw customers away from me?
Now that you have tools to abstract the information, the next step is to hunker down and get it. There’s no right or wrong way to compile the data, but the most simple and effective way is with a SWOT 2x2 Matrix:
There are alternative ways to label your boxes, however I would advise against the common practice of substituting “Now” with “Internal” and “Later” with “External”, as those variables do not allow you to seek out opportunities (i.e. team building) and threats(i.e. high employee turnover) within your own company. You can also find a wealth of best practices and templates online—here is one from businessballs.com that I find particularly beneficial.
Of course once you’ve got your SWOT all figured out, the next step is to take action upon your findings to ensure you continue to stay afloat. Although there may be some choppy waters ahead, you’d be amazed at how much easier that task will be once you’ve got your course mapped out. And if you don’t believe me, just ask the Father of Modern Science:
"All truths are easy to understand once they are discovered; the point is to discover them." ~Galileo
Please feel free to share some of your own findings and questions that have come from implementing a SWOT analysis with your business or personal life.