You probably remind yourself constantly of all of the struggles of operating a small business. You can list dozens of disadvantages that are a result of your small size. While there is nothing wrong with being aware of your weaknesses, please don’t forget a proper SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis also includes reviewing your strengths.
The importance of knowing your strengths
Note that identifying your strengths is the first step in a SWOT analysis. Knowing the aspects of your business which make you stand out is the first step to building a successful market position. Every company has weaknesses, but smart companies spend time building on their strengths. Think of your favorite brand. It could be a car company, a boat manufacturer, or a restaurant. Right now, take a piece of paper and list three disadvantages that company faces compared to the competition. Did you do it? I bet it did not take more than two minutes, once you forced yourself to think about it.
Why have you never thought about these structural weaknesses of your favorite brand before? The simple answer is, the company focuses on their strengths, and their partners and customers are pulled in the wake of this positive focus.
Large company advantages are shrinking
The general advantages of large companies are shrinking. Thanks to social sites, such as Linked-in, finding and building relationships with decision-makers is becoming easier. Thanks to cloud computing, overhead and infrastructure constraints now often favor small businesses. With CRM tools, the ability to keep your customers connected to your business no longer requires a large support staff. The growth of independent experts means you no longer need to hire a full-time accountant, lawyer, or marketing professional to be competitive.
These changes are to your advantage. The playing field is becoming more balanced. Your strengths, however, are what make you better than the other guys.
The advantages of your company are unique, but to get you started, here are some advantages of most small businesses.
The 5 strengths of a small business
Here is an incomplete list of strengths to get your SWOT process started:
1. Passion – Do not underestimate the importance of your passion or the enthusiasm of your team. The large companies I have been in do have passionate people, but the ratio of passionate people to “9-to-5, I can’t wait until Friday” people is a huge disadvantage of big business.
To maximize this strength: Feed your team. Send as many people as you can to the trade show. Send them to school if you can. Put a spring in your step and a smile on your face, and you will improve the energy of your whole company.
2. Knowledge – It is possible the big companies in your industry have more information than you do, but it is very unlikely they have more knowledge. One of the evergreen concerns of a big company is how to get the right information to the right people and empower those people to make the right decisions. You don’t have that problem. You know what your people know, and your people, because they are passionate, know a lot.
To maximize this strength: Bring everybody together at least once a week, and make sure everyone feels comfortable speaking. Encourage outbursts. Passionate people with new information often react emotionally, let them.
3. Speed – Your group has more enthusiasm and knowledge than the big guys, and these advantages create the advantage of speed. You correct problems more quickly. You see opportunities first. While the big guys are writing a cross-functional team charter to develop a new product, you have your entire company huddled around a pizza listing the features you need to include in your next big launch.
To maximize this strength: Create a culture of urgency and shared responsibility. There is nothing wrong with letting John surf the internet on Friday afternoon. If Joe is still unloading trucks in the back, though, send John out to help. He might just have a better and more efficient way, and then everybody has more time next week.
4. Lower cash flow demands – It may surprise you to know how difficult it is to manage cash flow in a big business. With one-hundred million dollars committed to new equipment, the pressure to sell that new product is huge. In many small companies, an extra ten thousand dollars in sales per month will leave everybody smiling. A “big fish” for you can be a customer that the big company down the street won’t even send a rep to meet with. You still have competition, but it is easier to feed a band of brothers than it is to feed a large army.
To maximize this strength: Stay comfortable but keep lean. Tightly control your debt and overhead requirements. Financial leverage is not a bad thing, but the pressure it creates can cause bad decisions. Also, cast a few lines in deep waters if you must, but focus on casting your nets in shallow waters. Small partners are rarely in a position to threaten to crush your business by leaving you.
5. Relationships – Being small means you know your customers and they know you. Big companies struggle to create top-to-top and middle-to-middle relationships. You can create top-to-everyone relationships. Many customers will temporarily leave you and then come back months later, and as you welcome them back, they will tell you how lonely it felt to be “just another revenue stream” for the big company on the other side of the country.
To maximize this strength: Always remember your customers are people first and business people second. They have families. They have dreams. They have histories. Talk with them, and encourage your team to engage.
Now you have a good start to your SWOT
With these strengths down on paper, you have a good start to your SWOT analysis. Add some more strengths of your business. Some potential strengths could be experience, location, cash flow, or an innovative product line.
Spend time on this. How you and your partners see your business depends on it.