SWOT Analysis for Service Companies: How to Improve Your Business

What is a SWOT analysis?

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Examining each factor gives home service business owners (like yourself) an understanding of the internal and external environment of their business.

For home service providers like cleaning companies, landscaping businesses, and plumbing companies, a SWOT analysis is valuable for identifying areas for improvement and growth.

• Strengths are internal attributes that give your business an advantage over the competition. For example, your cleaning company might have a trained staff, advanced cleaning equipment, or a good reputation for customer service.
• Weaknesses are internal factors that put your business at a disadvantage. Weaknesses can include outdated equipment, high employee turnover, or not as many service offerings as competitors.
• Opportunities are external factors that your business can use to its advantage. If you run a landscaping business, you might realize there’s a growing trend toward eco-friendly garden designs. Or there’s more demand for residential outdoor living spaces.
• Threats are external factors that could be problematic for your business. In the plumbing industry, for instance, threats might include new regulations or higher competition from other general contractors.

A SWOT analysis for service companies helps owners see the bigger picture beyond the day-to-day operations. It allows you to develop strategies that leverage your strengths, address your weaknesses, take advantage of opportunities, and mitigate threats.

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, 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.

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, salespeople, etc.

More people mean fewer 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)

Identifying internal factors is a crucial step in your service business SWOT analysis. These 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:

1.   Financial resources

Financial resources are the monetary aspects that support your business operations and growth.

For example, your general contracting company might rely on steady income from ongoing projects and revenue from completed jobs. There may be potential to expand your business offerings or enter new markets.

Managing these financial resources ensures that your service business stays financially healthy and can take on new opportunities.

2.   Physical resources

Physical resources are the tangible assets (tools, machinery, etc.) your business uses to serve customers. For your landscaping company, the assets might include a fleet of vehicles, top-of-the-line gardening tools, and an office or warehouse.

These resources are critical for efficient services and business operations.

3.   Human resources

Human resources are the people who work for your business. They’re often your most important asset. Your plumbing company with skilled technicians and a dedicated administrative team can offer superior service, leading to higher customer satisfaction. Which can then lead to repeat business.

Train your employees to develop their professional skills and maintain a competitive edge. Maintain a positive work environment to reduce turnover and improve productivity.

4.   Miscellaneous resources

Miscellaneous resources are the internal policies, guidelines, and systems that support your business operations. For your cleaning company, this could involve:

• Cleaning protocols
• Customer service procedures
• And business software systems (like Jobber) for invoicing and client management

These resources help streamline your operations and improve efficiency.

READ MORE: The best mobile field service apps to boost efficiency

External factors (opportunities and threats)

External factors are things your business can’t 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 five examples of external factors outside of your company’s control:

1. Market trends, new products, and technologies

Keeping up with market trends and advancements in technology helps you stay competitive. For example, your landscaping business might benefit from:

• Market trends: Sustainable construction practices, eco-friendly landscaping, and smart home integration.
• New products and tech: Project management software, drone surveying, and advanced irrigation systems.

2. Competition

The threat of competition never ends in the service industry. For example, your general contracting firm might be faced with:

• Existing competitors: Local businesses offering similar services.
• New faces: Start-ups or businesses expanding into your market.
• Large franchises: National or regional franchises with greater resources.

3. Changes in customer needs

Customer preferences can change, and being in tune with them allows you to adapt your offerings and meet expectations. Your lawn care service might see:

• Increased demand: Sustainable construction materials and eco-friendly lawn treatments.
• Decreased demand: Traditional, less sustainable services.

4. Legislative and economic regulations

Staying on top of law changes and regulations ensures that you remain compliant. You can plan for potential cost adjustments. Construction firms, for example, must stay informed about:

• Legislative changes: Safety regulations, building codes, and zoning laws.
• Economic regulations: Healthcare requirements and minimum wage laws.

5. Professional relationships with suppliers

Your business likely relies on suppliers for equipment and materials. Changes in these relationships pose risks. For your general contracting company, there may be a disruption in:

• Supplier reliability: Consistent delivery of said equipment and materials.
• Changes in terms: Contract renegotiations and pricing adjustments.

External factors are elements outside of your business’s control that can significantly impact your operations. They can affect any type of business, including construction firms, general contractors, landscaping businesses, and lawn care services.

While not all external factors will impact your business immediately, documenting them now will ensure you’re prepared for future challenges and opportunities. A thorough service industry analysis will help you stay ahead of the curve and strategically navigate these external influences.

Using your SWOT analysis

Once you’ve completed your SWOT analysis, the next step is putting it to good use. This is an ongoing process that should inform your decisions to drive growth.

Here’s how you can use the results of your service company analysis in the context of a landscaping business.

Leverage your strengths

Use your company’s strengths as the foundation of your competitive advantage. If your strength is that you have a skilled team of horticulturists and an arsenal of advanced gardening equipment, highlight these in your marketing campaigns.

Pro tip: Create marketing materials that showcase your skilled workforce and state-of-the-art equipment. Use testimonials and case studies to demonstrate your expertise and successful projects.

Address your weaknesses

Identifying weaknesses is the first step toward improving. If your landscaping business struggles with employee turnover, invest in training and development programs.

Pro tip: Conduct regular training and development sessions for your staff. Create an employee recognition program to boost morale and keep people around.

Take advantage of opportunities

Capitalize on opportunities that can lead to growth. Your SWOT analysis might reveal an increasing demand for sustainable landscaping solutions. You could position your business as a leader in eco-friendly practices.

Pro tip: Start a new line of eco-friendly landscaping services—organic fertilizers, smart irrigation systems, and drought-resistant plants.

Mitigate the threats

Being proactive in addressing threats helps you minimize their impact. If new competitors are entering your market, strengthen your customer relationships and improve the quality of your services—asking customers for feedback can help you stay ahead.

Pro tip: Start a customer loyalty program that rewards repeat business and referrals. Offer exclusive deals to retain your existing clients and make it harder for new competitors to steal them from you.

Originally published in June 2016. Last updated on July 30, 2024.