This is a question we often get asked at Hemsley Miller, and it stumps us every time. It’s almost impossible to pin down what makes a good business strategy because there is no definite answer.
The truth is that every business is different and a strategy for one business might be totally incompatible with another. Businesses exist for different purposes and have different aims and ambitions.
So, how do you work out what is a good strategy for you?
What is SWOT analysis?
A good starting point for identifying what strategy is right for you is a SWOT analysis. SWOT stands for:
- Strengths: internal advantages that give you the edge over your competitors
- Weaknesses: internal disadvantages that could be used against you
- Opportunities: external advantages that could give you a competitive edge
- Threats: external disadvantages that could negatively affect the company.
Strengths and weaknesses are both internal and controllable whereas opportunities and threats are external and out of your full control. Try coming up with a list of factors for each of these four categories.
Pros and cons of SWOT
Categorising your business’s internal and external strengths and weaknesses has its benefits and its drawbacks.
The main advantages of SWOT:
- A quick and simple method of analysis
- An easy way to get a broad understanding of your business
- Gives you foundation to begin developing short and long-term strategies
- Provides a benchmark for further analysis.
But on the other hand:
- Factors are not prioritised or ranked in order of importance
- SWOT has a habit of generating lots of ideas but not helping you select the best one
- It doesn’t provide direct solutions to your business problems
- Further research is needed for you to produce a comprehensive business strategy.
How to be successful with SWOT
Despite having limitations, there are things you can do to improve the success and usefulness of your SWOT analysis.
- Set a minimum and maximum amount of factors for each category: this helps you avoid ending up with list that is too long or too short.
- Be as specific as possible.
- Relate your factors to your competitors: this helps you identify whether it is a strength or a weakness.
- Try your best to rely on facts and steer clear of opinion.
- Prioritise your factors using advanced SWOT analysis techniques. Speak to one of our advisers for more information.
Get in touch
Hemsley Miller accountants and business advisers can help with your strategic business planning. Contact us on 01753 892 815 or email info@hmiller.co.uk to discuss your plans.