How to Identify the Strengths and Weaknesses of your Business
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:
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.
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.