As your business starts to really grow, you need to have a realistic picture of its current status on order to provide you with important data that gives you the right information to make wise business decisions to set goals and strategies.
There are several process models for doing this which can help bring you the clarity you need. These methods can reveal your strengths and weaknesses and show you an overview of market forces that affect you. This is an essential first step towards managing business growth.
1. SWOT Analysis
A SWOT analysis is the most widely used model. In this method, you create a grid for four different sections: Strengths; Weaknesses; Opportunities; and Threats.
Strengths and Weaknesses are internal to your company whereby your build on the current strengths which have got you to where you are now and can drive you forward. While weakness are the crucial areas that you now need to improve on going forward.
Opportunities and Threats identify market forces and other external factors which will affect your business.
The benefit of filling out this chart is that you can easily see the situation your business is facing.
2. SOAR – The Positive SWOT
SOAR is similar to SWOT but takes a more positive slant. It identifies Strengths, Opportunities, Aspirations, and Results. Just like your SWOT, you complete a list in each of the categories to give you a clear picture of your company and the current market.
Some say that since SOAR removes the negatives and therefore, it doesn’t give you a clear picture. However, those who have used this method successfully, say it’s more effective because it ‘reframes’ the negative factors into challenges and opportunities. While SWOT looks at the current situation, SOAR presents a vision of future growth.
3. PEST – A Look at the Outside World
PEST is a similar method that focuses on the market and other external factors. While you examine both internal and external factors with SWOT, the PEST analyse focuses only on the external environment. It stands for Political, Economic, Social, and Technological.
PEST analysis gives you a chance to look at trends in the world like social behaviours and attitudes toward health or lifestyle. It also evaluates the economy such as inflation and exchange rates, studies government regulations, and keeps an eye on technological innovations like automation or artificial intelligence (AI). PESTLE is a variation on PEST that adds in Legal and Environment.
4. SCOPE Planning – SWOT Taken to the Next Level
SCOPE planning is considered that SWOT is taken to the next level because it adds a fifth factor to the analyse by focusing more on strategic development. It stands for Strengths, Core Competencies, Obstacles, Prospects, and Expectations by taking into consideration the current situation as well as internal and external factors …with an eye toward business growth through assessing future prospects and expectations.
5. Porter’s Five Forces – Focus on Competitors
If you want to analyse the market and, in particular, the competition, you can use Porter’s Five Forces. This is a slightly more complex method of analysis that looks at five different market forces: Supplier power; buyer power; competitive rivalry; threat of substitution; and the threat from new entry into your market.
To use this method, brainstorm factors in each of these categories and chart them out on a graph. The completed graph will give you an idea of what you’re facing in your market from other businesses.
These tools are all helpful for businesses that are in the growth stage or want to expand and grow. And analysing your business and the market is an important first step because you need to step back and have a birds’ eye view of your entire business situation.