Evaluating your business is an important step in running a successful company and being competitive in your market. It can be easy to get caught up in all that you are doing and forget how well your marketing strategies are working. Luckily, there are different methods to help with this! This chapter will review two methods and show you how they work: market gap analysis and SWOT analysis.
There are many ways to evaluate your business. One of the most important things you should do is conduct a market gap analysis and SWOT analysis. These analyses will allow you to see where your company falls short, what opportunities exist for improvement, and what strengths you have compared to other companies.
When conducting these analyses, you must consider internal and external factors such as economic environment and industry trends. In this chapter, we will discuss how to conduct both types of analysis so that you can start improving your business today!
Here are the main topics of this chapter in case you want to jump ahead.
Do you think your business is operating at its full potential? Well, the best way to find out might be by taking a look at what’s going on internally and externally. That means analyzing strengths, weaknesses, opportunities, and threats while reviewing our progress over time concerning the goals we had set for ourselves. There are two popular ways of doing this: SWOT analysis and gap analysis.
SWOT Analysis vs Market Gap Assessment
The market gap analysis evaluates the opportunities and threats within an industry, while the SWOT analysis focuses on internal strengths and weaknesses to improve your marketing efforts. These two approaches are used in tandem to help understand what strategies will work for your company’s future, especially since statistics show that about 90% of new businesses will fail within 5 years of starting.
The first step is to know what you’re looking for. What are your marketing goals? How do these goals align with the business’s vision and values? These questions form an understanding of how competitive your company might be in the future. Businesses should consider their current market share, size, and forecasts when evaluating if they need a new strategy.
Once you know what needs to happen, it’s time for market gap analysis and SWOT analysis. Market Gap Analysis is figuring out the customer demographics that your business does not cater to or has difficulty attracting, while a SWOT Analysis focuses on internal strengths and weaknesses. These analyses will help businesses understand how they are doing in their industry.
Analyzing Your Market Demand
The next steps are to find out the market demand, which is done through competitive research and industry analyses. These can help businesses understand where they want to be in their industry by providing a timeline of what has happened over time. It’s important not just for this step but for every phase so that business owners know how much work will need to be done to get to the top.
In this step, it’s also important for businesses to determine what their competitive advantage is and how they can use that as leverage with customers so that if a competitor ever comes into the industry, then business owners know how much work needs to go into making sure there isn’t overlap between them and the competitor.
What Is SWOT Analysis?
A SWOT analysis is a thorough examination of your business’s strengths, weaknesses, opportunities, and threats. It helps you determine the value that your organization has within its industry market. SWOT analysis may also sometimes be referred to as a SLOT Analysis replacing “weakness” for “liability” in the applicable acronym.
The SWOT acronym is an easy way to remember that Strengths, Weaknesses, Opportunities, and Threats should all be considered as you conduct your analysis.
If we think about this in terms of a chess game, we can see how the four components work together, just like any other set of pieces on the board.
For example, let’s say that you are a small business in the United States.
Strengths
Strengths are the pieces that we have left, and they strengthen us in our quest for victory.
What strengths do we have? We might identify our people as one of the key factors for success and point out how dedicated they are to their work.
A company’s strengths are those things it does well. It is important to take stock of these strengths and ensure they are highlighted in your marketing.
Weaknesses
Weaknesses show where we lack something or need a better strategy
What weaknesses can we see within our company? One weakness is not having enough marketing and advertising to get the word out about our company.
A company’s weaknesses may not be obvious at first, but they exist nonetheless. You should identify them to improve on them or work around the issue completely if possible. Doing this will make your company more competitive in the market.
Opportunities
Opportunities help to point out an area of opportunity (for example, new markets)
What opportunities do we have? We might look at the economies of nearby towns and cities that are not doing well right now, or even other countries, to see if there is an opportunity.
It is important to identify opportunities that may exist, even if they are not readily apparent at first glance. These gaps can be filled by analyzing your competition and making sure you offer something different or better than what others provide. One way of doing this is with your marketing.
Threats
Threats highlight any weaknesses as well as pointing out anything else about which you should be aware.
What threats can we identify within our business environment? One potential threat is a competitor that might be using unethical business practices to get ahead of us.
Threats are potential problems that may arise in the future. For example, if your company is a small business and you have not made any investments for growth, then there will be no opportunities to grow in the near future. On the other hand, threats can also include an up-and-coming competitor with more resources than you have. Coming up with a new product or service class can help position your company even in the most competitive markets.
A SWOT analysis can help you identify how to balance weaknesses or eliminate threats. For instance, a company might find itself in the position of having an excellent product, but there’s lots of competition for that product. A SWOT analysis would let them know where they need to focus their marketing efforts, so customers are more likely to purchase from them instead of competitors with similar products.
What Is Market Gap Analysis?
A market gap analysis is a qualitative evaluation of your business’s marketing. It is used to understand what you are good at (strengths), where there may be opportunities for improvement (gaps), and how best to position yourself in your market. A marketing gap analysis can help you be more competitive by evaluating your strengths, taking advantage of opportunities that arise, and eliminating the obstacles ahead of you.
Simple, Reactive Approach
You might be asking why your company would need a gap analysis. Well, if you’re looking for an immediate strategic action that needs to happen or something more reactive in nature, then this is the type of business analysis for you!
A need-gap analysis is a reactive approach to business that addresses an immediate strategic issue you face. It’s less about long-term planning and more about the problems close at hand, providing important insight for your company despite its reactivity.
Why Is a Gap Analysis Important?
Gap analysis is important for evaluating your business because it will allow you to understand: the opportunities that arise from what is currently happening inside your company and the opportunities that await you in the future.
If your company faces many problems, then gap analysis will give you insight into where those issues are coming from and address them so they don’t persist. It can also help you identify new business ventures or projects for expansion while considering current needs with existing products and services.
Once you have taken note of your company’s current situation and identified its weaknesses, you can ensure your company is more successful in the future.
How Do You Conduct a Gap Analysis?
The first step of conducting a gap analysis is understanding the current state of your business and what it currently needs. This includes identifying any opportunities that may arise from those gaps to reach your job’s full potential, such as how you can improve systems or make better use of time.
The second part of this process includes identifying any opportunities that may arise from those gaps to reach your business’s full potential. This includes understanding what you need and how to prioritize it.
The third step is developing a plan, which will help guide your business in achieving its goals from where it currently stands.
It’s important not only to identify these gaps but also to create plans for closing them! These are just some helpful tips on how to evaluate your own business.
There are three ways that you can conduct a gap analysis:
First, ask your staff what they think the gaps in your business may be.
The second is to use customer feedback and complaints about your company.
Thirdly, identify any problems with distribution channels or suppliers by analyzing data related to inventory control and service levels.
Step One: Gathering Data – The first step in evaluating your own business is to gather all the data you can about where it stands currently and how it stacks up against competitors or other businesses with similar functions. This includes gathering information on what needs are not being met, leading to further research on potential market opportunities. It
Step Two: Identifying Goals And Objectives – The second step is to identify the goals and objectives you would like your business to meet to be successful. This includes mapping out how these changes can improve or create a new market opportunity.
Step Three: Evaluating Your Own Business – It’s time now to evaluate your business based on the data you gathered and against these goals and objectives. You’ll want to be looking at how closely aligned they are, which will help determine if there are opportunities for improvement or what changes need to happen for them to align better.
Step Four: The Future – Once you have gathered all the data, it’s time to start making changes. The first decision that needs to be made is what type of change should be made and how they will know if this was a success.
Important questions to consider when conducting a gap analysis are:
-What can we do right now to get more leads?
-What can we do right now to increase the conversion rate?
-What is our current marketing budget, and what are some other options for getting more leads or converting prospects into clients that we could implement today with these funds?
A detailed gap analysis might show that a sales team used to cold calling might find themselves struggling to get leads in a market is oversaturated cold calling market. Looking into other ways of creating leads along with marketing automation might make more sense at this time.
A gap analysis is designed to determine the distance between where you are and where you want to be. It’s a process of analyzing your current situation, identifying what changes need to be made to match up with the desired outcome, including big-picture goals and smaller objectives on an individual level.
Final Thoughts on How To Evaluate Your Business
Now that you know your strengths and weaknesses, it’s time to figure out who is the best customer for your business. You’ll use this knowledge to create buyer personas in Chapter 3 of our Small Business Marketing Guide. It may seem like a lot of work upfront. Still, when you can identify exactly what type of customers will purchase from you, marketing becomes significantly easier because all efforts will reach potential buyers instead of random audiences.
