By Kenneth Surbrugg, Director of the Center of Entrepreneurship at Missouri Southern State University
Strategic planning is the process of thinking about and analyzing where you are now, setting goals on where you want to be at some definite point in the future, and then figuring out how you intend to reach your future goals. In other words, strategic planning is about understanding where you are at today (point A) and where you want to be at some definite point in the future (point B) and then figuring out how to get from point A to point B.
This strategic planning process begins with a SWOT analysis: an analysis of your company’s Strengths, Weaknesses, Opportunities, and Threats. Strengths and Weaknesses are internal to you — the specific areas in which you excel (strengths) and those areas that are not as strong (weaknesses). Opportunities and Threats are external to your company — where you see areas of growth and those forces that may cause harm to you.
Strengths are those areas in which you perceive excellence within your company. Do you have solid proof of these claims? What processes or skills do you have that are superior to your competitors? What makes your company strong? It is within this section that you state your strengths, but you also need to offer support for those statements. For example, suppose that you list superior customer service as a strength for your company. What proof do you have to support that claim? Do you measure customer service? Do your customers rate your company five-out-of-five stars in customer service? Have you won an award for your superior customer service?
Weaknesses are those areas in which you perceive shortcomings within your company. Again, is there proof of your weaknesses? This is an honest internal examination of your company. For example, suppose your margins are slipping and the company’s profitability is less than it was a few years ago. What is the cause of this? If you do not know, then what are you doing to research the problem? If you are too busy, then maybe time management or delegation is a weakness. If you do know what is causing profitability to fall, and you have not done anything about it, then maybe the ability or process of decision-making is a weakness.
Opportunities are those that exist outside the company that you see as an area to explore and maybe exploit. Is there a new market (either here or overseas) opening up where you can compete? Can you find new or unique ways for your product or service to serve a new market and capture additional sales for your company?
Threats are PEST (political, economic, social, and technological) factors that have the potential to threaten your company. Sometimes you can see these on the horizon, such as a new regulation that will restrict your ability to compete. On the other hand, sometimes these take you by surprise, such as the severity of the coronavirus. How prepared are you for these threats? What corrective actions can you consider to meet these threats?
It is easy to either overestimate or underestimate within a SWOT analysis. There may be internal strengths that you think are superior to others when they are not, or weaknesses that you perceive are large and insurmountable, when they may not be so big. That is why it is so important to do this process over a period of time — maybe a week or two — and to think through this analysis.
There is an advantage in having your core team, as well as all of your employees, conduct a SWOT analysis for the business. Give them some time to work on this alone and then compile the results into a companywide SWOT analysis for the management team, and the rest of the company, to see and review. There may be an employee who has a thought or idea that could prove valuable to your company’s survival. If you never ask, you will never know.
As you look back on 2020, what areas of your business were the strongest, the most prepared? What areas of your business were the most vulnerable, the least prepared?
With this exercise in hand, what is next? After you completed your SWOT analysis and affirmed your company’s culture, the next step is to determine where you want to go and the steps needed to take you there. Come up with a plan to get you from point A to point B. Then check that process periodically to make sure you are going in the right direction. Monitor your progress and allow yourself, if applicable, to make any course corrections along the way.
Nevertheless, the first step in this strategic plan process is the SWOT analysis.