I was given the privilege of being the Chairman of this year’s Selection Committee for the next recipient of Metro-Atlanta’s Small Business Person of the Year Award. It was quite an experience as there were several outstanding candidates. The announcement of the top five finalists and winner will occur at the Metro Atlanta Chamber on May 21st during an event-filled Small Business Day.
What was interesting to discover in this process of selecting the winner was the variety of answers we received to the first of three, and the only business related question asked during the personal interviews. The question was: “We know the importance of strategic planning in facilitating the long term growth of a company…. the basis for building a strategic plan rests with a thorough SWOT analysis....and one element of the SWOT is Threats. Other than the economy, what is the single biggest threat to your company’s future growth?”
We asked this question to get a sense of how well these small business owners truly understood their business and did they, in fact, have a plan for growing their company.
Before reading further, what would your answer be to this question? Write it down.
Now read on.
Here is a quick recap about SWOT. SWOT is the acronym for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is usually done as a prelude to building a Strategic Plan. It drives you to look at your business both internally (Strengths and Weaknesses) and externally (Opportunities and Threats). With this analysis completed, you have the material necessary to craft a Strategic Plan - a plan that should address how you intend to enhance your strengths, minimize or correct your weaknesses, exploit the market opportunities and counter the threats.
Though this may sound simple enough, surprisingly very few small and mid-sized companies undergo this assessment. Worse yet is they perform this appraisal but fall into the trap of drinking their own bathwater by believing, for example, something is a Strength when in reality it is simply a minimum customer expectation. “Our people” or “our customer services” are the most common Strengths I hear from business owners that fit this - bathwater - category. You have to have some highly credentialed (PhDs...) staff or be constantly providing ultra-extraordinary customer service experiences to make either of these legitimate business strengths.
So what are legitimate Threats to a business and why is it important to identify them? First, as far as a SWOT analysis is concerned, a Threat is an external force - never internal. Second, accept the fact every business has real Threats which should be acknowledged and guarded against. Third, failure to identify these Threats and take action to counter them can bring a business to its knees.
There are numerous case studies of businesses large and small that either failed to acknowledge a Threat (“we have no threats”), or failed to change course to counter a threat. Imagine being that company producing tube televisions because you didn’t think LCD - flat panel technology - was legitimate or the mighty internet company (Yahoo) who produced the first marketable online search engine yet failed to believe anyone could make a better product (Google).
As a business owner you should clearly understand the threats to your future growth. Whether it is technology that makes your product or services obsolete (digital camera vs. film), a new trend (Facebook) which renders your product (MySpace) passé, or a competitor who is marketing a better “mousetrap” (iPod), it is incumbent on you to not only be aware of these Threats, but have a strategy in place on how you are going to thrive despite them.
About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement. www.AllegroConsultant.com
