A new business owner can often wear many hats. You are responsible for the day-to-day operation of the business and also charting its growth. Important measurements include knowing when to hire new staff and when to expand the products or services.
Identifying strengths and weaknesses in your business will help you make those sound decisions.
By year five 50% of small businesses fail. Poor planning and no direction are reasons for a lot of closures. If you have a solid business plan from the start, it will include certain milestones.
The success, or failure, in reaching these goals will say a lot about your future.
Each time you reach a goal it should be assessed. How soon did it take you to obtain the goal? Was it a plus for the business and can you build on it?
Keep reading to see why identifying your strengths and weaknesses can help your company grow.
Identifying Strengths and Weaknesses Improves Growth
In the corporate world identifying strengths and weaknesses is done through SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
In its simplest form, SWOTs show you what you’re doing right and how you can improve in those areas. It also points out what’s not working for your company. The results can help you decide if the processes can improve and if they are needed.
Implementing the results can have a tremendous impact on your business. The analysis will reveal a lot, including your potential for expansion.
You will also gain a better understanding of your need for improvements in technology and security. SWOT-analysis helps you learn how to better position yourself for investors. Remember, a lack of working capital is behind a lot of business failures.
A SWOT analysis shows investors you are serious about your business.
Analyze Your Customers Behavior
A customer’s behavior tells you a lot about your business. Weaknesses in the business appear that you may have never considered.
Understanding the buying habits of consumers has a direct impact on your bottom line. If your faithful customers only buy once a month, you need a strategy to get more consumers through the door. Otherwise, losing one or two committed buyers will create a shortfall in your income.
This is prevalent in the service industry. Say you own a cleaning business, and three of your clients leave the country for several months each year. Chances are they won’t need their home cleaned while they are away.
Do you package your services at an annual rate paid over twelve months? Will you have a special service where you open the house in anticipation of their return?
More importantly, how do you account for the decrease in income during slow months?
Stay Abreast of Industry Trends
Identifying strengths within your company is connected to industry trends. Knowing what is happening in your industry is vital to planning for your future. Trends in technology and marketing are important to your success.
Are you in an industry that relies heavily on a digital presence? Do you know what’s trending in product placement and customer retention? Failure to keep up with what is happening in your market will quickly highlight weaknesses in a business.
Consumers follow what’s new and if you are not offering the newest things they will not hesitate to go to someone who will. In a fast-paced environment, customer loyalty is fleeting.
Provide an Outlet for Feedback
The best source for identifying strengths and weaknesses in your business is by going straight to the people directly connected to your success. Consumers, employees, and sometimes vendors can tell you all you need to know.
Don’t be afraid to do satisfaction surveys. Ask the tough questions to get the right answers.
It is always best to do confidential surveys where respondents can submit their answers anonymously. These tend to provide the most responses when collecting feedback.
For customers, ask questions about the products you offer. How often do they purchase from you? What are their feelings on quality and value?
You may also include questions on competitors they shop with.
When surveying employees, don’t focus so much on how happy they are working for you. Instead, solicit feedback on what they feel are the business’ strengths and weaknesses. Let them know their opinions matter by asking for suggestions on improving the services being provided.
If you decide to survey your vendors, focus on trying to get a look into what competitors are doing.
Once you have the feedback, use it to make improvements in your service model. You won’t be able to incorporate everything but do enough to show the respondents you took their feedback seriously.
Understand the Data Behind Product Sales
Every company needs to have metrics in place to understand what its sales trends are revealing. Are there products that are not moving from the shelves? Do consumers love one particular service more than others?
Investing in products consumers aren’t buying is wasted resources. Figure out if it’s not selling because you aren’t marketing it successfully. Or could it be that people just aren’t interested?
Your insights can reveal a lot in areas of your business you may not be considering. Before removing a product or changing a service, understand the data behind it.
Pay Attention to the Competition
It’s okay to pay attention to your competition. This is a great way to determine how well your business is doing. It doesn’t mean you should emulate everything they are doing, but a cross-comparison doesn’t hurt.
Having competitors that have been in business longer than you have can be an asset. They have already proven that success is possible.
Chart Your Business Growth
Now that you understand the benefits of identifying strengths and weaknesses in your business, you can start working on your growth. If expansion is on your five-year plan, you will definitely want to know what’s working and what’s not.
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