SWOT Analysis for Your Service Business
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and examining each factor gives business owners a solid understanding of the internal and external environment of their business. For this reason, a SWOT is a great tool to help get your head out of the weeds as you run your business day to day. It’s an exercise in seeing the bigger picture.
When should you do a SWOT analysis?
If you’re thinking about offering a new service, expanding to a new market, or changing your prices, just to give a few examples, a SWOT analysis is a great way to get a lay of the land before you commit to any one idea. Maybe you find out that a competitor has a monopoly on the new service you want to offer, but there’s a gap in the market in another area that you can swoop into.
In general, there’s no wrong time to perform a SWOT analysis. It is a good exercise to reveal business opportunities and threats, and it makes you aware of strengths and weaknesses that you need to remedy or use to your advantage. Go figure!
How to perform a SWOT analysis
Our biggest piece of advice here would be to involve other people in your analysis. If your business is small enough, involve everyone. And if your business has multiple departments, involve customer facing employees like field workers and admin staff, sales people, etc.
More people means less blind spots, and a better SWOT analysis.
Grab a notepad, assemble around a whiteboard, or grab a pile of sticky notes and set up next to a blank wall. Set up four rows or quadrants, and go through each of the factors as a team, then see what your various perspectives reveal to you about your business.
We break down the four factors in the following paragraphs.
Internal Factors (Strengths and Weaknesses)
These internal factors in your table will be made up of things directly under your control as a business manager and company owner. It’s hard to take advantage of external factors before ensuring that your internal factors are on point.
Luckily for you, internal factors are easier to identify, and they can be broken down into four easy components:
- Financial resources, like income jobs, revenue, franchise, and investment opportunities
- Physical resources, like your brick and mortar location, equipment, and other material inventory
- Human resources, aka employees
- Miscellaneous resources like current policies, programs, and procedures your business has developed. Any internal protocol tools that you’ve purchased, or business software systems to help with invoicing or client management (like Jobber) that you subscribe to would also belong here.
External Factors (Opportunities and Threats)
External factors are things your business cannot control. They can and do affect any type of business. Not all potential external factors will impact your business right now, but documenting them now will ensure you’re ready for them in the future.
Here are some examples of external factors outside of your company’s control:
- Market trends, new products, and technologies, such as faster communication devices or software tools for business management
- Potential threats of competition from new and existing businesses in your industry—this includes the potential for larger franchises to enter your market
- Changes in customer needs, such as an increase in some service calls and a decrease in others
- Legislative and economic regulations, such as impending minimum wage laws, health care legislation, etc.
- Professional relationships with suppliers and anything that might change on their end