Are you consistently preparing your business for the future? Are you recognizing and taking advantage of opportunities to increase the success of your business? Do you identify and address challenges your business may face? Recognizing and identifying your business opportunities and challenges is important. And you then need to take action to use your learnings.
What is a SWOT Analysis?
With a group of other interior designers, I first learned about and was trained to lead strategic planning through my professional interior design organization. We realized not only could it be used in our professional organization but also positively affect the success of our design firms. The strategic planning technique that particularly resonated with all of us was the SWOT analysis. A lightbulb went off for many, so much so that some designers began to incorporate it as a decision-making tool in other areas of life.
A SWOT analysis is a strategic planning tool used to identify and evaluate the Strengths, Weaknesses, Opportunities, and Threats of an organization. A SWOT analysis is an assessment of both internal and external factors that affect your business. That awareness will help you evaluate your competitive position to make informed decisions and develop strategic planning. Strengths and weaknesses are internal. Opportunities and threats are external. Those factors can affect your firm’s current and future success.
A SWOT analysis is designed to look at your firm and the industry using facts and data for a realistic evaluation. It is not something you just do once. You should conduct this analysis periodically. It can be used for a variety of decisions in your business, and it also offers a written record – a tangible history of your progress. It provides a reference point for future decision-making. With each update, your SWOT analysis becomes a living document that guides your strategic thinking and helps you stay responsive and adaptable in an ever-changing business climate.
How to Identify Strengths and Weaknesses
In a SWOT analysis there are four categories laid out in a quadrant. Strengths and Weaknesses are in the top two sections of the quadrant. These are internal. They relate to your firm itself. Opportunities and Threats are in the bottom two sections of the quadrant. They are external. These factors are outside your firm’s control. But awareness of them means you can be prepared to respond to them.
- First, identify a specific objective. Though a SWOT analysis can be broad, it will offer more value if it is more focused on a particular objective.
- For example, you may perform a SWOT analysis to evaluate whether to expand into a new market. Do your strengths lend themselves to making this move? How might your weaknesses hold you back? What are the external opportunities and threats that need to be considered if you make this move?
- Or you may perform a simpler SWOT analysis to decide the value of attending certain marketing events. Will it be the best use of your time and effort? Simply list the strengths/advantages as well as the weaknesses/disadvantages for your business if you attend. These are internal. Then identify the opportunities that might occur if you attend and what you might miss – the threats – if you do not. These are coming from external factors.
- Next, gather your resources – the data and personnel needed. For some SWOT analyses this can be quick and simple. But for other objectives it can be valuable to reach out to people outside your firm. I would encourage you to reach out to ideal clients, friends, industry partners, your CPA, etc. Offer to take them to lunch and ask if they’d be willing to offer input for your SWOT analysis. Look for those who may have expertise in the external factors that could offer opportunities or pose threats.
- Then begin to fill in the quadrants. This is where it can be helpful to have others brainstorm with you. They can help you identify your firm’s strengths and weaknesses as well as the external opportunities and threats on the horizon. You may simply be too close to your own business, and benefit from an outside perspective.
SWOT Analysis Considerations
Internal Strengths:
- What makes your firm stand out from the competition?
- What is the unique value your firm offers?
- What do our clients think are our greatest assets?
Once you have created your list of strengths, then consider how you can capitalize on those strengths to continue to grow the success of your firm. Ask for referrals and testimonials – and ask them to state why they enjoyed working with you and what they feel makes your firm stand out.
Internal Weaknesses:
- In what areas does your firm need improvement?
- Do you have the necessary processes and procedures in place?
- Where are you vulnerable (financials, technology, lack of personnel, lack of succession plan, etc.)
Use your list of weaknesses to identify where and how you can improve. We can always improve, and a successful firm conducts a SWOT analysis regularly to bolster its strengths and address its weaknesses. For example, if you have had some difficult clients, then you might address this deficit by putting a conflict resolution plan in place.
External Opportunities:
- What external factors give your firm a competitive advantage?
- Niche target markets
- Marketplace trends you can capitalize on
- Technological advancements you can get in on early
- Demographics you are not yet targeting
- Business coaching and learning opportunities to grow the success of your business
It’s important to stay aware of opportunities that provide additional help and education. Learn how to turn technology from a vulnerability into an asset. It can help set you apart from your competition. It gives you the ability to review a contract with your client via Zoom instead of in-person, to save time. Technology also offers you the ability to research design ideas and products quickly. It allows you to create a virtual library that you can access from anywhere. Technology and education combined offer you the opportunity to improve your business skills with business coaching and masterclasses such as those offered by The Pearl Collective.
External Threats:
- What external factors, though beyond your control, could create challenges for your business
- Legislative/regulatory effects
- Direct competition and their market share
- Economic downturns
- Competition poaching your employees
If you are aware of possible threats, then you can plan how you might prepare for them. Being aware of potential external threats can sometimes be turned into an opportunity. This is also an area where having input from people with expertise in these areas is very valuable.
One of the assets of interior designers is their creativity. Approach a SWOT analysis with that creativity. Identifying and using your strengths and addressing your weaknesses helps you build a stronger, more successful company. Consistently be aware of external opportunities and use your creativity to take advantage of them in building a successful business. And finally, be aware of the potential threats on the horizon so that you can be prepared to weather the storm or turn them into unexpected opportunities!