How to Identify the Strengths and Weaknesses of your Business

strength weakness arrow up down word

As a business owner, it is important to know everything possible about your business, so you can make the most informed decisions. It is essential to know what you do well, and where there are opportunities for improvement. Knowing your strengths and weaknesses allows you to make better plans to target the exact areas you need to focus on in order to grow and achieve greater success. This knowledge will also be important when it comes time to sell, so you can better answer the questions of prospective buyers.

It is generally much easier to identify strengths than weaknesses, that is basic human nature. It pleases us to focus on the areas in which we thrive, and it is certainly helpful and encouraging to recognize these areas and think about how we can do even better. It is far more difficult, however, to admit our areas of weakness. No one likes to focus on negatives, and many people tend to overlook weaknesses, pretend they do not exist, or deny them altogether.

This approach is not healthy for either an individual or a business. Anyone who has a garden knows that weeds sprout up from time to time. And when this happens, the last thing a gardener would do is ignore them or deny that they are there. If you do not take steps to deal with the weeds, they will eventually take over your entire garden.

With this in mind, every business owner should take the time to identify their strengths and weaknesses. Here are some of the most important steps to take with this process:

Table of Contents

Confirm your Assumptions

You probably have some good ideas and educated assumptions about your business, and especially about the areas where you are strong. This is a good start, but assumptions alone do not equate to facts. Confirm your assumptions with solid data. Collect data on areas such as your sales trends, customer loyalty, employee satisfaction and retention rates, and your overall profitability. The more you know (know, as in, knowledge you possess backed by quantifiable data) about your business, the better equipped you will be to make good decisions as you plan for the future.

Analyze your Business vs. Your Competitors

Take an objective look at how your products/services stack up in the marketplace. What is your unique value proposition? In other words, what distinguishes you and makes you better than your competition? What steps can you take to solidify and improve upon your competitive advantage? Now, on the flipside, what advantages does your competition have over you? And what steps do you need to take to close the gap against your competitors in these areas?

Seek Objective Feedback

Solicit the opinions of outsiders in helping determine what your strengths and weaknesses are. Ask family members and friends who are not stakeholders in the business what they see. Ask your vendors and others you do business with what they think. And get the perspective of your employees. You may also want to ask your customers/clients for their opinion. If you go this route, create a survey for them to fill out and if possible, offer something of value in return for completing the survey.

Review Complaints about the Business

If you have received any direct complaints from customers/clients or just have some negative online reviews, look carefully at what you are being criticized for. Some people are impossible to satisfy, and there might be some complaints that you cannot do anything about. However, if you are getting multiple complaints about a particular issue, then this criticism might have some merit. If there are some valid complaints, look for ways to effectively address these issues, and beyond that, think about ways you can turn these weaknesses into strengths.

Perform a Review of Your Work Processes

Work processes are extremely important to the functionality of a business. While you and your employees are the ones who make the business run smoothly and you should recognize people who perform exceptional work, no single person should be irreplaceable (including yourself). When the right processes have been established and put into place, your business is set up for long-term success.

Invest some time into reviewing your processes and workflow. Look at how your employees communicate, work and collaborate together, and how these processes ultimately serve your clients/customers. Which areas are running smoothly? Which areas could use some tweaking or perhaps overhauling?

Examine your Sales and Marketing Strategies

There are two important qualities that help make a business grow and prosper: great customer service and an effective marketing strategy that brings in a steady flow of new business. How is the performance of your sales and marketing strategy? What is your average customer/client acquisition cost? Are you satisfied with the ROI your marketing strategies are generating?

Do a top to bottom review of your sales and marketing processes and identify what is working and what is not. And if you are not sure how to separate the two, consider bringing in some outside help. It is very important that you cut out the dead weight in your marketing budget, so you can dedicate more resources to the strategies that are most effective.

Solicit Honest Feedback from Your Employees

A business may have weaknesses that the employees are well aware of, but the owner has no idea about. On the other hand, there may also be hidden strengths that the owner does not know about, strengths that could be turned into opportunities to increase revenue.

The employees are the ones who have the most first-hand knowledge about how the business is operating, and they are in the best position to know what is working well and what needs to be improved. Ask for feedback from your employees on this topic, and in order to get the most honest answers, you may want to have them submit their feedback anonymously.

Obtain Feedback from Customers/Clients

Customers and clients may not know the inner workings of your business like your employees do, but they know first-hand the end results they are producing. You can search through online reviews to get an idea of what your customers/clients think, but you might also want to solicit their feedback directly in the form of a survey. In order to incentivize their participation in the survey, offer them a gift card or discount on their next purchase.

Listen and Observe what is Happening in Your Business

You might be familiar with the TV program Undercover Boss in which owners disguise themselves and work for a few days as employees to see what’s really going on in their company. Your business might not be big enough for you to go undercover, but you can at least make a more concerted effort to observe what is going on with your operations. Gaining a closeup view will help you better understand what your business is good at and what you need to work on during the coming year.

Put Yourself in the Shoes of a Buyer

One of the best ways to put together all of the information you have uncovered about your business is to take a look at your entire operation from the perspective of a buyer. At some point, you will most likely want to sell your business, so it is useful at any stage to try to see things the way a buyer would. If you were someone who was looking to buy a business, would yours be worth investing in? If so, would an outside buyer realistically be willing to pay what you believe the business is worth? Hopefully, you can answer “yes” to both of these questions. If not, then you probably have more work to do.

Be the first to get notified about new listings