Critical Small Business SWOT Analysis Example

Here is a swot analysis example based on an exercise I had to do recently. A SWOT analysis examines the Strengths (S) , Weaknesses (W) , Opportunities (O) and Threats( T) of a perspective of one thing, be it a company, a product, a proposition, and idea, a method, or option, etc.

It is also a powerful decision making tool.
In this SWOT Analysis example, it was a proposition to enter a new market for a small software company that had been producing it's own sophisticated decision support and productivity software for nearly 25 years. SWOT tells you what is good and bad about a business or a particular proposition. Once you have the SWOT analysis worked out you can then respond by creating goals and strategies by

• maintaining , building on and leveraging your Strengths
• prioritising and optimising you Opportunities
• Fixing or exiting from your Weaknesses
• countering your Threats

When doing a SWOT it is good to keep your answers short, simple, specific, and realistic. So let's get started and remember to keep foucusing on the proposition...

The propostion was to resell an exciting new business intelligence (BI) product for example like Tableau which overcomes many of the limitations of the existing BI products - difficult to use, costly, and slow to implement and change.

Many software resellers have their own existing product or service client base on to which they can build sales of the resold product...adding value if they can with consultancy and training.

This company also has the problem that come three to five years their main product now will be potentially displaced by new technology. They need replacement product lines quickly. Their current market is 'slow' with a sales life cycle of 18 months to two years.

They are also based in a rural setting with few large and medium sized organisations around, but they make maximum use of the internet to service current national and worldwide customer base.

So here we go with this SWOT Analysis example.

Strengths

• Good with databases and analysis
• Experience of overseas selling
• Interested and passionate about data analysis and trending
• Good balance sheet
• Reselling a product is quick - no product development required.

Weaknesses

• Currently have a small customer base with few customers with time to analyse their data
• No other vertical market - would need to find one!
• Only receive a percentage of sale - question about potential profitability
• Lots of potential competition - from established products...'we already have one of those thanks'
• Need 'good paying customers to prevent cashflow issue - having pay software vendor before the client has paid.
• Credibility with large corporations or organisations - little direct experience of big BI projects

Opportunities

• Create an 'Add On' to existing Products or Services
• BI software is a growing market
• Use the product to find new application areas for company area
• Use product to find new vertical market for a new base product.
• Offer Consultancy and Training
• Initial cost of sale recovered over time by further sales of the product to the same account.
• Current trends in industry and commerce to reduce costs - great need for data analysis

Threats

• Vendor changes selling policy and drops resellers
• Bad product release spoils product image...and effects the ability to sell
• Company resource is drawn away from current high value added (high profitability)activities to this lower value added (low profitability) activity.
• Competing with vendors own sales teams and other more local resellers

So what strategy should they adopt in this SWOT analysis example.

1. They should focus their efforts on departments of large organisations and medium sized companies to maximise the long term 'add on' or repeat sales as the product use spreads within their customer organisation over time. This type of customer is also more likely to buy the most expensive (higher profit) reseller product e.g. Server Software rather than desktop software. Targeting this market segment should also minimise payment issues and protect cash flow. Also it minimises the drift to low profitability work
2. They need to build their competence and credibility quickly e.g. offering technical newsletter or bulletins, and try to distinguish themselves with highly responsive technical support. They need a competitive advantage over other resellers and the main vendor.
3. Offer existing customers a service e.g. Benchmarking - do their analysis for them
4. As the software vendor is not in their time-zone, they need to take advantage of this 'local' advantage
5. They should move fast and invest to gain a good customer base before other resellers enter the market
6. They should try to find customers for the product/services in the industry they are in now and in related industries. This would build on their current knowledge (strength) of their current experience
7. They should focus on high value added activities such as training courses and consultancy
8. They should consider adding a second BI product to their portfolio or developing their own BI product in the medium to long run to guard against a vendor policy change or bad product release

This concludes this SWOT analysis example. I hope you found it of interest.

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