"Other than the economy, what is the single biggest threat to your company's future growth?" This was one of three, and the only business related question asked during the personal interviews of the 10 finalists for Metro Atlanta's 23rd Annual Small Business Person of the Year Award. I was honored to be the chairman of the Selection Committee. We asked this question to get a sense of how well these small business owners truly understand their business – the competitors, the climate – and did they have a plan to counter these threats.
As a business owner, how would you answer this question? As a business owner, you should know.
Businesses that consistently grow year after year have several things in common. Chief among them is they each operate to a well thought-out plan and the plan was derived from a frank and honest SWOT analysis.
SWOT is the acronym for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is usually done as a prelude to building a strategic plan. A SWOT analysis 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 (why is this upper case?) – 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 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. Your staff must be highly credentialed (PhDs) for this to be a real strength. Likewise, the same exceptional standards must be met before customer service could ever be a qualified strength.
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 faces real threats that 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 still producing tube televisions because you didn't think LCD – flat panel technology – was a threat, or the mighty Internet company (Yahoo)that 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 company's future growth. Whether it is technology that could make your product or services obsolete (digital camera vs. film), a new trend (Facebook) which renders your product passÈ, 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 for how you are going to thrive despite them.
Mike Gomez, the founder of Allegro Consulting, is a business growth specialist. He has served as a program management and business development executive in both Fortune 500 companies as well as small businesses. Gomez can be contacted at 678-908-8433 or m.gomez@allegroconsultant.com.
