Performing a SWOT Analysis
A SWOT (strengths, weaknesses, opportunities and threats) analysis is an important part of business planning. It’s an opportunity to assess whether you are serving customers in a way that aligns with your shop’s mission, vision and core values, says Anne Lazo, owner of automotive marketing firm Motorhead Advantage. The analysis provides information that helps make better business decisions, initiates effective long-term plans, and keeps the organization moving in a positive direction.
Lazo discusses how auto repair shop operators can perform a SWOT analysis for their business, and how that helps develop a strategic vision for the future.
Shop owners assess four key areas of their business through a SWOT analysis. If it’s done correctly, you should see some concrete information developed from the process that can be used to generate a strategic action plan for the future.
Performing a SWOT analysis is not a one-time activity. It should be done periodically. That’s because your business, the economy, and consumer habits constantly change and evolve. What you think customers want might not always be true, and services customers wanted in the past might not be the case today.
As a rule of thumb, shop owners should conduct a SWOT analysis on an annual basis. Some owners might find it valuable to do it more frequently.
Let’s take a look at each component of the SWOT analysis, and how to make a thorough, written assessment of your shop:
Strengths: Analyze the various services you offer, and identify all of the things that your shop is very good at doing. Your shop might have expertise to work on a variety of vehicle models, extensive training to complete complicated types of repairs, or a specialization in specific types of repairs such as trucks or hybrids. This helps determine the current value proposition of your shop, and the value you are offering to your customers.
Once you have that list of strengths, identify how you plan to capitalize on and leverage those characteristics to the benefit of your shop and how you can differentiate from competing repair facilities.
Weaknesses: Make a list of everything that your business does not excel at. Assess the areas that are hindering potential growth of the company, such as common problems or issues you experience with customers.
Identifying each of your key weaknesses is essential because other shops that outperform you on your weak areas could use that to steal business away. So you have to dig down and figure out what changes must be made to eliminate those common pitfalls.
Identifying your weaknesses could reveal the need to change your business model, update operational processes, obtain additional training, or implement new standard operating procedures. Assessing your list of weaknesses should help you determine specific changes that must be made to transform those areas into strengths.
Opportunities: Shops need to look at new ways to enhance the service they’re already offering, and expand the breadth of services they have the potential to provide. Look for new business opportunities that exist in the market.
To do that, assess any changes that have taken place in your local market and the buying habits of consumers in the community. Identify whether customers are asking for certain services that you’re not currently providing that you’re capable of providing, or if there is potential to diversify or specialize your business in a way that will attract new customers or types of work to your facility.
Once you make a list of those observations, you can decide which market opportunities make sense for your business plan and model, and put specific plans in place to capitalize on those business opportunities.
Threats: Outline any problems you could encounter with your business based on societal factors or new services you hope to implement. Identify all of the trends and issues happening in your local area that could hinder the success of your business goals and objectives.
For example, say you choose to offer a new specialized service such as hybrid repair. You want to assess whether there are any factors in place that could make that effort difficult to accomplish. Are there already several shops in your area that offer that same service? Do those locations have training or expertise that are more attractive to consumers than the expertise you can offer? Identifying those operational threats helps you understand how feasible certain initiatives will be to implement, and the various obstacles you will need to overcome if you decide to pull the trigger.
That information is important in order to put specific plans in place to combat and overcome those challenges. You can put proactive processes in place when you have a good idea what to expect in advance.
A SWOT analysis helps immensely when developing strategic business plans. It gives you several considerations to account for before jumping into a new business initiative so you’re not hit with surprises down the road.