We are hearing more and more about an economic downturn. First quarter 2022 GDP was negative and has been lowered even more recently. In last month’s article the focus was primarily on making the internal process more efficient and including suppliers and customers as partners in the operating process to the benefit of all. In addition to the focus on the operating process doing a SWOT analysis of your served market and your place in it is essential.A SWOT (Strengths, Weakness, Opportunities, Threats) analysis is a technique to measure how your company and your competitors measure up in the marketplace.
How do you do a SWOT analysis?
A good starting point is to update your Vision of what you want the company to look like in 3-5 years and clarify why your company exists or should exist. What makes you special. The second step is to bring the key people in your company together and share your decision that the company is going to prosper during the slowdown. The third step is to identify your competitors. Finally, determine what is your total market and the percentage each of you enjoy.
To keep the analysis manageable, I’d compare the top three competitors to my company. I would post the answers to each area on wall charts for all four companies.
Some of the question to be answered are:
- Which customer does each of the four serve? What are the annual sales of each customer? If you can’t get that from a database or the research service of your library, find out how many employees are at each location and multiply by $100,000.
- Does any company have intellectual property rights?
- Who has gained customers in the last 12-18 months?
- Do a market survey, or have it done, to see what is important to the customer’s decision maker.
- Visit and survey your customers to find out their pain points.
- How do the facilities and production capabilities of each compare?
- Who upgrades their product regularly?
What do you want to know here? Some thoughts:
- Which customers have changed suppliers recently and why?
- What quality issues are you aware of? Recalls, late deliveries, customer complaints to mention a few.
- Have there been changes in the management team lately and why? Are there weak spots, especially in the sales organization?
- Government regulations you have or are coming that could reduce your benefits to the customer/marketplace.
- Employee issues, getting and holding the talent you need and at what cost.
- Supply chain problems affecting on time deliveries, requiring design changes, new vendors.
- What does each competitor do that you wish you could do?
They are always there in a troubled economy. It is usually easier to list what more you can do for your customers, but which could carry over to potential customers:
- Which competitors are or could be weakened by the downturn?
- What new products would be welcomed by the customer base?
- What are areas where more can be done to reduce the cost of product (not decrease in sales price) to the customer?
- What other services could be offered to the customer to make you a more valued vendor?
What could happen internally or come from outside to damage the company or put you out of business. We can list some:
- Change in government regulations.
- Vendors unable to supply products.
- New players in the industry with products that replace yours.
- Competitors reducing prices to penetrate market.
- Shortage of cash flow that concerns your financiers.
- Slowdown in accounts receivable payments.
The purpose of a SWOT analysis is to focus you and your management team and mobilize action plans to hit your goals. A good practice is to relate your strengths to opportunities. Likewise, comparing your weaknesses to threats can give operational direction. SWOT analysis is hard work and not something usually done in small businesses, but SCORE is here to help. Many of our SCORE mentors have done this work.
Why not click on “SCORE Minnesota Client Resource Guide” to see part of the richness SCORE brings to you. Your job as a business leader is to do what is necessary to survive and grow your business. Be a Leader! We all need you.
Dick Jordan richard.jordan@SCOREvolunteer.org 218 251 4413.
Mentor Dick Jordan of Brainerd Lakes area in Minnesota writes a monthly column on business advice.