With the turn of each year, most of us take a moment to reflect on the past year (s) to see how we can improve on our lives moving forward. We reflect on the past, acknowledging our triumphs as well as our failures. It is in this reflection that we seek to grow moving forward. It is imperative that we take a serious look at our failures, because they are often our greatest source for learning. We must also rejoice in our triumphs and take a serious look at how we can replicate our success.
Moving forward into the new year I always like to take a look at measurable goals. What were last year’s goals? How did we attain them? Where did we fall short? What can we do to improve our market share in the years to come?
So one thing I like to do to ensure that we are always on top of our target market and competitors is a SWOT analysis.
The Four Areas for Analysis
- Internal Strengths: It can be difficult to point out our own strengths. As a business owner we are often very critical of our own businesses. However, there is no business out there that doesn’t have an advantage over their competitors in one way shape or form.
- Internal Weaknesses: In this section you want to define your weaknesses, not what is wrong with your company, but items that have a true impact on your performance within your market.
- External Opportunities: Your analysis should include untapped niche markets, and emerging trends. Using the Ansoff Matrix below to identify areas in which to improve your existing business.
- External Threats: Most threats come from changes in government policy, economic change or new market conditions. While you can’t necessarily change these factors you can understand them in order to reduce the risk to your profitability.
By undertaking this analysis it will help you focus your energies to:
- Build or maintain your current strengths.
- Reduce your weaknesses.
- Identify and maximize your opportunities.
- Mitigate any threats.
Tips to Improve the Results of Your Analysis
Tip 1: Prepare a SWOT for both your business as well as two to three of your competitors and your nearest two competitors. This analysis will provide real insight into who you relate within your industry.
Tip 2: Relative to your competitors, prepare your internal analysis. If there are two or three businesses that all have the same strength, then likely, it is not a strength. By identifying trends within your industry, you will uncover the true positive strengths that only you possess.
Upon completion of the analysis, you should develop specific actions that focus on the four most important elements to your business success.
- Strengths: We have impeccable online presence backed by reviews and testimonials.
- Weaknesses: We do not have a national presence, and therefore our brand is less recognizable.
- Opportunities: We are the fastest growing community of our size, with the real estate construction experiencing tremendous growth, in both the residential as well as commercial sector.
- Threats: The influx of new businesses in the same market is experiencing steady growth.
Using the Ansoff Matrix to Define Growth Opportunities
Over time, as market conditions change, a product or service that was in high demand previously, may require your attention. Advances in technology, competitor changes or pricing promotions could make your service/product less desirable. The matrix above could help you find new market opportunities. Here’s how to use the information gathered from your company.
- Market Penetration: Selling existing products/services to your current client base.
- Market Development: Selling existing products/services to new customers.
- Product Development: Selling new products/services to new customers.
- Total Diversification: Selling new products/services to new customers.
When we look at market penetration we are looking to see what services or products we are offering in a given area of the market. Next we look to see our saturation levels in that area, or how many clients are we servicing. Is there an opportunity there to reach more clients in an area that is already being serviced, or have we reached the maximum threshold in a given area? In order to make the most of market penetration, you will want to examine the areas in which there is the least amount of saturation for the highest gains.
Existing Services/Products to New Customers
In field services industries we want to think of this on a daily basis, not just once a year. We must always be marketing to new clients in order to grow. So, how do you get your market, yourself, your brand to entice new customers? Is there a market area that you have not tapped into? Have the demographics gone through any changes in your area? These are all ways to identify how you can take what you already have and turn it into revenue.
New Services/Products to Existing Customers
One of the best ways to grow your business is to offer your existing client base something new. In order to do this effectively it must align with your current offerings. By “NEW” I don’t mean that it has to be something completely new. In many cases this can be done by up selling and adding-on to existing services, or products that you offer. For example, if you have a residential cleaning client whom you regularly do just a basic cleaning for, you can add-on the extra’s throughout the year. Spring is a great time to do a deep cleaning. The fall and holiday season is a great time to add on the oven and the fridge as extras. Each of these increases the revenue of an existing client.
Before you consider diversification be absolutely certain that you are ready for it. Diversification is not to be taken lightly, and it is perhaps one of the riskiest ways to grow. For a small business, diversification can mean adding on new services or products that have not been offered in the past. Be sure to do your market research and see what your current clients think of the idea. The new product or service needs to add immense value for your current clientele in order to succeed.
Using these strategies throughout the year can give you the opportunity to step back and take a look at your opportunities in the market. New companies, new products, new services emerge on a daily basis. Just as companies, products, and services die out on a daily basis. Keeping an eye on your market will give you a leg up to take your business to the next level.