Use this SWOT Action Plan to quickly develop a set of actions to improve your business.
Conducting a SWOT analysis helps provide direction by shining a light on what your business does well and where you’ll need to improve.
Usually strengths and weaknesses are internal aspects of your business (what are you good at, what are you not so good at), while opportunities and threats are external forces (what is likely to impact on your business in a negative or positive way).
How to use this tool
As you navigate your way through the pages, you will be prompted to answer key questions and select items.
Simply fill in each box and download your plan when you get to the end.
Every business has a number of strengths that keep them in business. If people are paying you money then they perceive a benefit in dealing with you.
Identifying your strengths in comparison to competitors will show you what to focus on. Reinforce your strengths to customers and suppliers. For example, if you have great staff, then profile them in local newspapers. If you have the latest equipment, then run an advertorial in the newspaper and create a specific flyer. If you are located near major roads, then outline on your website the convenience of travelling to you and include a map. There is no point in discovering a strength and not taking advantage of it. For example, it's great knowing that your strengths are:
- Your personality.
- Unique product.
But how can you actually take advantage of these factors?
You need to implement ideas such as:
- Building a social media campaign that features you, and regular social media posts, commenting on issues about your industry, speaking at events etc.
- Highlight in all marketing material that you have exclusive product, and then lock this in by obtaining a supply agreement with the source of the product that you can be the only distributor in your area. If you make the product yourself, ensure it is has intellectual property protection.
Remember a strength can only benefit your business if customers know what they are, and they make you a better prospect than your nearest competitor.
The Coffee Court Ltd.
Our two key strengths are our location and that we have the best barista in town. People drive past other cafes to come to us.
To retain these strengths, we:
- Have a bonus scheme with the barista so a percentage of profit is paid each month to provide them with a feeling of ownership. We also invite the barista to events and allow them to attend barista education events and enter competitions.
- Signed a long lease and currently seeking to buy the building to guarantee our location.
Customer lifetime value
Do you know how much the average customer is worth to your business long-term? Every repeat customer is a vital asset that keeps cash flowing into your business.
Customer lifetime value is the entire potential net profit you can make from an existing customer. By managing your relationship with them to better meet their needs and preferences, you can increase their lifetime value to your business.
A customer who comes in only once and buys one item, for example, would have the same lifetime value as the item they bought. However, another customer who buys the same product but then keeps returning every week for five years would have a lifetime value 260 times that of the first customer.
Key elements of lifetime-value selling include:
- Personalising offers and the buying experience through direct mail correspondence and other database marketing techniques.
- Treating complaints as opportunities to encourage long-term loyalty from customers by putting things right in a friendly and non-challenging way.
Custom Kayak Sales and Repair Ltd.
We have a network of dedicated customers, consisting of mainly amateur multi-sport racers who regularly need new equipment and accessories. These customers have been returning to my business for years and have been invaluable for building word-of-mouth referrals.
Some of my customers are beginner or casual kayakers who purchase one or two items at a time, but prefer to purchase from cheaper online chain stores. I can increase their lifetime value by signing them up to my e-newsletter that contains my monthly specials and promotional offers. I’m also offering training days tailored to new paddlers that will hopefully create some regular customers.
Identify your weaknesses and reduce them
What are you going to do to reduce your weaknesses? Every business has something that they can improve.
Work at removing or minimizing the weaknesses you identify because they can hinder your growth. Be honest in your assessment and then try to address them.
You can often turn weaknesses to your advantage. For example; a travel agent's weakness may be that they can't take bookings online. To counter this, they could advertise the benefits of calling and speaking to an agent in person. They could also start planning a website and run physical seminars and workshops to create a personal relationship.
You can only do something about your weaknesses once you've identified them. So if you identify weaknesses such as poor cash flow or weak brand awareness, then you can assess what action to take, such as talking to your bank about extending finance (or starting conversations with business investors) and creating a brand campaign.
The Coffee Court Ltd.
Our key weaknesses are the limit in how much we can actually sell, as we can only have a certain limit of people in the store at one time. For example, we couldn’t make 1,000 coffees in an hour, as it isn’t physically possible. Currently, our business is reliant on passing traffic and is not able to expand into other areas. As a business with a fixed location we are stuck where we are. These are weaknesses that we can be addressed or reduced with a little strategic thinking.
The ways we could reduce these weaknesses include:
- Investigate a mobile coffee van that allows us to sell coffee outside our area.
- Develop the store and add in a second coffee machine for takeaways only.
- Conduct a study on flows of customers and see how we could be more efficient and get more people served during the day.
- Start taking orders online so the coffee is ready by the time the customer comes in to collect. We could also develop an app that allows customers to place an order, and then we send a text when it is 2 minutes from pick up.
- Allowing local businesses to run an account to speed up transactions at time of pick up. We will require each business to pay their account every month and will only offer it to our best customers.
Key weakness bonus – building credibility
Credible and trustworthy businesses earn their reputation by having a proven track record. You can offset weaknesses by being the most expert and credible in the market.
Picture a business you would consider credible or trustworthy. What makes them such a reputable choice for their target market?
It’s usually a combination of having the right products and services, sufficient industry knowledge, and a proven track record of good customer service.
Businesses don’t become credible overnight – it’s earned by specifically aiming to be perceived as knowing more than any other competitor in your business.
Some ways to further build your credibility include:
- Join any industry organisations that are relevant to your customers to demonstrate that you are passionate about your industry.
- Create an online presence; Facebook, Linked in, Twitter and any more specific community that’s part of your industry.
- Become the ‘expert’ in your line of work by submitting papers to conferences and writing white papers about your product or service benefits.
Custom Kayak Sales and Repair Ltd.
I’ve decided to focus on a few key areas to boost credibility in a tight market. First of all, I know that the majority of my customers will Google my name or look at my website before picking up the phone or visiting me in person. It’s important that my website contains the relevant information people are looking for when purchasing a kayak, from my history and credentials to specific technical information about each boat.
I can also add value by adding some how-to blogs and consumer guides I have written to inform beginners about correct paddling techniques and safety considerations on the water.
Identify growth opportunities
Opportunities are future ideas that you should be considering or experimenting with over time. They could be product, service, market, industry or technology focused.
Opportunity exists even in every economic climate. For example, your competitors may disappear, or you may decide now is the time to refocus and investigate new markets. Get your staff and advisers involved – they may be able to identify opportunities you haven’t spotted.
- Buying another business to expand to other regions.
- Importing new product lines, or exporting your products to overseas markets.
- Reviewing new technology that will give you an advantage over the competition.
- Working with another business in a key strategic partnership (ideally a much larger business) so you can take advantage of their scale
- Tendering for large-scale projects.
Now see if you can match these resources to possible opportunities out there.
When you are brainstorming opportunities, make sure they are big opportunities. For all the effort you put in, it makes sense to investigate opportunities that will make or save you hundreds of thousands of dollars rather than a $50 monthly saving on your power bill.
Our opportunities are to look at new customers, new markets, and developing services no one else has thought of.
We will consider:
- Build an bigger online presence and develop our own apps that will allow users to get our content for free, and then we can create in-app purchases to drive revenue.
- Research how to sell online via social media channels and build a presence.
- Attend health care conferences as a new market and identify new products/services that they may require. Set up a separate health care division of the business and employ a person with health care background to manage this project.
Identify threats and offset them
You need to recognise and minimise negative influences on your business. Threats are things that could upset your business such as competitor action or changes in legislation outside your control. You need to minimise the impact they have on your company.
Your threats can vary from hidden costs such as compliance or insurance costs to unplanned expenses such as new equipment or vehicles.
You’ll also need to think long-term – is there anything that could affect your business in the future? Common examples are future developments, emerging technologies, and increased manufacturing and compliance costs.
Some risks are beyond your control, such as the possibility of a natural disaster occurring, or a competitor starting up down the street. These potentially damaging risks can be reduced with a good risk-management plan.
For example, if your threats were:
- A change in legislation.
- A new competitor targeting your customers.
Then you might decide to:
- Lobby local politicians to delay the new law.
- Keep track of future legislation changes.
- Start a loyalty campaign with existing customers.
- Research the competition to look for weaknesses.
If you need some help with possible threats, then consider what could be happening:
- Politically – any local laws or legislation that may impact on you?
- Economically – any changes to the income levels of your customers?
- Socially – any movement in the types of people relevant to your business?
- Environmental – any changes to regulations you have to comply with?
The Coffee Court Ltd.
My biggest threats:
- There are plans to open a shopping mall a few miles up the road, but this is likely to take years to complete so I have plenty of time to mitigate the threat. I will review other malls that opened in other regions to see what happened and possibly I will seek a tenancy in the new mall
- The area where I’m located was subject to a housing boom 10 years ago, but is now an affordable option for first-time home buyers, or people on a limited budget. As a solution, I will widen my appeal or encourage existing customers to stay through a customer loyalty card, offer some lower priced items and daily specials
Assess the competition
Identify how a SWOT analysis can be used to increase your market share. Start by developing a strategy to reduce the impact of competitors on your business.
Competitor research and the management of competitive advantages go hand-in-hand. Your business will have at least one competitive advantage it can exploit, but if you don’t research your competitors and other threats, you won’t know how to use it effectively.
Your competitive advantage is how customers see you in the marketplace.
Find ways to:
- Improve your points of difference over competitors or develop new advantages.
- Improve how you communicate your competitive advantages.
You need to identify the immediate threats that could force you out of business and the weaknesses that make your business vulnerable to these threats. Competitors are the first threat.
Analyse your competitors’ advertising and their effectiveness using relevant sales channels, and consider buying products and services from them yourself to experience what they offer. If you’ll be recognized, hire a mystery shopper or ask a friend to go in your place.
Before you start, write down a list of the questions you need answered so you have a plan to stick to. When you’re finished, try to identify your most vulnerable areas and what you can do to position your business more effectively against your competitors by using your competitive advantages.
The Coffee Court Ltd.
My top three competitors are all cafes within a 30 minute walking radius of my store.
The Caffeine Shack is another value-oriented business and our toughest competitor on price. However, their low margins mean they can’t hire trained baristas and their coffee is only a bit better than the sludge you’d get out of a machine.
Crack-a-Jack Coffee is a branch of a nationwide chain. They often beat us on price when they schedule specials or test out new coffees on their head office-mandated menu, but their biggest asset is the brand. Local people and tourists flock to them because they know what they’re getting.
T. Ltd is an upmarket, kind of nouveau riche hang out for customers who don’t mind paying bar prices for tea and coffee. Granted, the coffee is pretty amazing, but it’s the sheer range of their menu and the expertise they market that make them the top dog at the premium end of the market.
The biggest threat is Crack-a-Jack Coffee. It’s visible from our shop, so we need to immediately differentiate from them. Traditionally, I’ve tried to compete on price with The Caffeine Shack. However, whenever they want to, Crack-a-Jack has been able to use its large buying power to introduce penetrative pricing for a new product and be the cheapest on the market when it needs to be.
A SWOT analysis is an important part of finding ways to develop and maintain your confidence, drive and enthusiasm to succeed.
It will highlight things you can do to exploit opportunities and prepare for threats to your business.
It's easy to get so caught up in the day-to-day running of your businesses that you never think any further ahead. A SWOT analysis will help you spend time thinking productively about the future.
You can now open your Action Plan.
Your Action Plan is a Microsoft Word compatible document that you can save and edit.
It outlines all the action points and ideas that you recorded as you worked through this module.