Use this tool to improve your strategic planning

An analysis of your company’s strengths and weaknesses should be a key component of your strategic planning process. This easy-to-use tool also identifies your company’s opportunities and any threats it faces (hence the term “SWOT”).

This analysis helps you see how you stand out in the marketplace; how you can grow as a business; and where you are vulnerable. The process takes into account both internal and external factors your company must navigate.

Address issues in your planning

Don’t make the mistake of preparing a SWOT analysis and then ignoring it as you develop your strategic plan. Instead, your plan should include concrete steps to harness your company’s strengths in order to target the opportunities identified in your analysis. The plan should also include specific measures to address the weaknesses and threats you face.

Here are more details on the four elements in a SWOT analysis.

1. Strengths

Make a list of your company’s internal strengths. These are any competitive advantage, skill, proficiency, experience, talent or other internal factors that improve your company’s position in the marketplace and can’t be easily copied.

Examples include solid financing, a superior brand, valuable intellectual property, superior technology, modern equipment and/or machinery, a well-trained sales team, low staff turnover, management expertise, operational efficiency, high customer retention, good supplier relationships, etc.

2. Weaknesses

These are the factors that reduce your company’s ability to achieve its objectives. Examples include unreliable suppliers, outdated equipment and/or machinery, insufficient marketing efforts, lack of financing, management weaknesses, gaps in expertise, etc.

Be as honest as you can when identifying these deficiencies. Ignoring weaknesses means you can’t make decisions that will strengthen your company.

3. Opportunities

Opportunities are external factors that allow your business to grow and be more profitable. Examples would include new potential markets; innovations; technological advances; consumer trends; support from governments, the community or business partners; etc.

One way to identify your opportunities is to closely analyze your competitors’ weaknesses.

4. Threats

Threats are external obstacles your business must overcome. Threats may include a declining economy, a consumer shift to other products, technological change, a labour shortage, community opposition, legal or regulatory changes, etc.

It’s often useful to take a close look at your competitors’ strengths to identify external threats to your company. Again, be as honest as possible.

A SWOT analysis doesn’t have to be a long, complex document. Two or three pages of point-form notes are usually sufficient. Free templates for a SWOT analysis are easy to find on the Internet.

You can put your SWOT analysis findings in the table provided below:

It’s worth revisiting your SWOT analysis at least on an annual basis, particularly when you review your strategic plan.

Some entrepreneurs might not see the benefits of strategic planning or know how to proceed.

Here are answers to some of the most common questions and concerns raised by entrepreneurs about this important tool.

Question: My company is small. We don’t have a lot of money. Isn’t strategic planning just for bigger companies?

Answer: That’s a common misconception. All companies, large and small, can benefit from planning for the longer term. It can help you weather today’s challenging markets, diversify and proactively pursue the best opportunities.

Strategic planning doesn’t necessarily mean producing a big, highly detailed document. It can be done on a smaller scale at a reasonable cost for businesses of any size.

Question: How can I find time for strategic planning when I’m already swamped with the day-to-day business of running my company?

Answer: Taking the time to work on your business instead of in your business will pay big dividends, including helping you be less swamped day to day. A strategic plan can help you focus on important issues, make decisions, delegate, reduce errors and not waste so much time putting out fires.

Question: Won’t strategic planning cause a lot of disruption to my business?

Answer: Planning for your business may lead to changes in your company, but they will most likely be positive changes. The end result should be better decision making, wiser use of resources and improved growth and profit margins.

Also remember that change will happen anyway, regardless of whether you develop a business strategy. A plan will help you anticipate change and focus on the best opportunities, rather than reacting and letting change take you by surprise.

Question: How can I plan long term when the future is so uncertain and I have no idea what will happen next week, let alone several years out?

Answer: Planning is needed precisely because the future is uncertain. The information you have today can be used to make reasonable forecasts of what the future might hold. Thinking about the future helps us plan what to do in various scenarios so we can be more ready for whatever it brings.

Question: Everything is fine with my business, so why would I need a strategic plan?

Answer: It’s common for entrepreneurs to feel their business is doing great—until a sudden change takes place that disrupts or even imperils their company. Planning strategically can help you prepare for such changes and stop flying blind.

Question: Why should I do strategic planning when I already know I need to grow by investing more in sales and marketing?

Answer: Sales and marketing without the right strategy won’t necessarily bring you success. They could just increase your costs. And even if your sales go up, will you sell the optimal products at the best margins to the right customers? Will you have financing, operations, and distribution in place to handle the sales increase?

Question: Why do I need a plan when I already talk regularly about our business goals with my team?

Answer: Even if you discuss your goals internally, a strategic plan gives your entire team a clearly articulated line of sight to those goals.

Too many companies go into hibernation when times are tough. They cut costs, conserve cash and act as if they’re on the verge of bankruptcy when, in reality, their balance sheet is still solid enough to reposition the firm.

Whether it’s a recession or a downturn in your particular industry, don’t assume you can wait until the storm has passed before taking action. It may be too late.

Use these setbacks to get aggressive. It can be a great opportunity to build market share.

One entrepreneur’s experience

Auto parts maker Warren Industries, for example, had to endure some painful body blows at the beginning of the 2008 recession. The troubles of General Motors and Chrysler contributed to a 45% drop in sales.

Despite the slowdown, CEO David Freedman wasn’t about to start circling the wagons.

In addition to bolstering its engineering capacity and developing proprietary technologies, the company took advantage of the economic downturn to negotiate better lead times and prices with hungry suppliers.

It also purchased machinery and other equipment at bargain-basement prices.

Move up the value chain

Even before the recession, Freedman and his team realized it was no longer good enough to simply stamp out and assemble other companies’ parts. They needed to move up the value chain by adding engineering expertise that allowed them to develop their own proprietary products.

The result was transformational. Warren Industries evolved from a Tier 2 company making other companies’ products into a Tier 1 supplier developing innovative and highly engineered products that it can now sell directly to customers.

6 ways to go on the offensive during tough times

1. Reinforce relationships with clients and suppliers. Reassure clients you’re a dependable supplier who will be there for the long term and confirm that your suppliers are stable.
2. Boost operational efficiency. In times of crisis, employees are open to change and galvanized to help.
3. Rethink your business model so that the offering is truly differentiated.
4. Attend industry trade shows. They’re a great way to make new contacts, develop new markets and find out what’s happening in your industry.
5. Understand the services available from organizations like BDC and Export Development Canada. They can help grow a business in difficult times.
6. Form an advisory board. It can be a wonderful source of fresh ideas and bring skill sets that are often out of reach for many small businesses.

Use these tips to get the most out of your trade show investment

Trade shows provide face-to-face contact with people who are looking for products, expertise, and solutions.

So how can you tap into this rich source of potential customers? What investment is required and what return on investment can you expect?

Veteran trade show consultant Jonathan Denman shared these six tips.

1. Calculate what it costs

“Booth rental is really only part of the total cost of exhibiting,ˮ Denman says. “There’s travel to the show, customer hospitality, and many other expenses.ˮ

Denman is a member of the CAEM (Canadian Association of Exposition Managers) Hall of Fame. The association provides the following cost breakdown for a typical industrial trade show. This data can be used to estimate your total show cost.

So for instance, if booth rental costs $5,000, your total cost is likely to be around $17,250. Sounds expensive. But let’s say over three days you discuss with and acquire contact information for 150 good prospects, your cost of acquisition per lead is $115. You can further apply your conversion rate to give you an idea of your cost per sale. If your conversion rate is typically 10% (10 leads to get one sale), then you can expect to have 15 sales at a cost of $1,150 which may or may not be unreasonable for your product.

2. Find the right shows

“Every year there are between 14,000 and 15,000 trade shows across North America,ˮ Denman says. “You need to focus on specific shows that attract the right audience.ˮ

“Given enough time, the Canadian Trade Commissioner Service can sometimes provide you with market information and contact lists for the geographical area covered by a trade show,ˮ Denman advises.

The Canadian Trade Commissioner Service maintains a list of major trade events around the world. The Government of Ontario also maintains a list of international trade shows.

3. Design your booth for maximum impact

You may not have a big budget, but what you do have should go toward maximizing the impact of your back-wall signage. “The sign at the back should take up 70% of the back wall and feature your company name and what your company does,ˮ Denman says.

• Don’t clutter it up with small photos and descriptions. Choose one good image to blow up and make sure your company name can be read from afar.
• Keep your table and chairs away from the back wall and make sure there’s enough room for visitors to move around inside your booth.
• Try to get as much frontage as possible and try to be situated near high-traffic areas.
• If you have the budget for a big booth, you may be able to include a quiet corner or even an office to negotiate with potential customers.

4. Make sure you have enough staff

Show organizers should be able to provide you with the estimated number of visitors to the show. From that, divide the number of visitors by the number of show hours. That gives you the average hourly flow-rate, which can help you decide how much staff you need.

It’s really difficult for one person to engage more than six visitors per hour in meaningful conversation. So, plan accordingly and remember there will be peak times when you may be swamped, and there will be times where there are no visitors at all.

“The challenge for the small exhibitor is they will only be able to have two or three people managing the booth,ˮ says Denman. “They can only talk to 12 people each hour. If the flow rate is 600 people per hour, they’re missing out on important opportunities.ˮ

5. Staff your booth with experienced people

This isn’t a typical sales environment. “Most salespeople are trained for one of three things: Either they’re on the road, or on the phone or in a showroom,ˮ Denman says. “Trade shows require a different approach. ˮ

“You’ve got to have an opening line… something like ‘have you seen our product before’ or ‘are you familiar with our company’… something to draw visitors into a conversation.ˮ And once you’re conversing, you have to have something to say. “Unfortunately, many exhibitors staff their booths with junior people who may not know a lot about the company or its products.ˮ

“Imagine a buyer who’s an engineer: This person needs technical advice. They’ll be disappointed if the only information they can get is a pamphlet that they could have downloaded from your website.ˮ

So it’s better to staff your booth with technically proficient, senior people.

6. Always follow up

Remember, at the beginning and end of every sale is a person who wants to feel good about his or her purchase: They may want a deal but what they’ll remember is the way you made them feel.

Before the show, you can demonstrate you’re thinking of your customers’ needs by sending a personalized invite to the show—perhaps with a redeemable beverage ticket.

After the show, a good way to show that you’re working on finding them a solution is by sending a follow-up email within 72 hours.

Trade shows can be cost-effective venues for establishing face-to-face relationships. A little forethought and preparation will go a long way to converting booth visitors into buying customers.