Step-by-step: using a SWOT analysis to create a tactical plan
Some business owners make a practice of doing a SWOT analysis of their entire business every few years. If you compare the results, you may notice trends or find new ways to grow your business.
You can also use a SWOT analysis to address a specific problem or goal, which is how it relates to a tactical plan.
Let’s conduct a SWOT analysis using a SMART goal example: doubling a business’s profits within one year.
Imagine the business is a small restaurant in a medium-sized city. It’s primarily a lunch destination for the many office workers in the area, although the restaurant also serves dinner. It’s already been open for a year and has some regular customers, but the owner isn’t sure what to do to increase profits.
Here are the results of her SWOT analysis:
- There’s a regular crowd at lunch.
- Customers give the food good reviews and especially like one of the hot sauces.
- We sell out of a few dishes almost every day.
- The employees like working here.
- We have a good location near local businesses that support us.
- There are no social media pages or website.
- Some customers complain about slow or rude service.
- We don’t know exactly how much money we’re making or spending each day.
- We’re making a profit, but not enough to build our savings.
- Find ways to serve more customers during lunch.
- Offer after-work deals to attract customers during the otherwise slow period.
- Sell merchandise, such as T-shirts or bottled hot sauce.
- Start keeping detailed records of our sales and expenses.
- Create an online presence.
- Improve employee training.
- A competing restaurant could open and take our customers.
- If one of the nearby offices closes, we won’t have as many potential customers.
- Our suppliers could increase prices.
- The landlord could increase the rent.
- Negative reviews could keep new customers from visiting our restaurant.
Next, she reviews the results to come up with several strategies:
Strengths and Opportunities (SO): We could create an after-work deal menu that’s different than the lunch menu to help get our regular customers to return later in the day. We should make sure the staff is trained to remind lunch customers about the deals.
We could also offer catering directly to the nearby companies, which will increase our lunch sales and introduce our food to more office workers in the area. The catering could be a second source of income. Then, if we can bottle and sell the hot sauce, which is already popular, that could be a third way to make money.
Additionally, building a website and social media presence could help us advertise our deals, catering and hot sauce.
Strengths and Threats (ST): We could start a rewards programme that allows customers to get a free meal after 10 purchases. The programme could help us keep our regular customers even if a competitor opens a restaurant nearby.
Since we’re selling out of a few items every day, we should try to figure out how many more ingredients we should order — a recordkeeping system could help. Maybe we can use our larger order to negotiate lower prices with our suppliers.
Weaknesses and Opportunities (WO): The after-work specials opportunity could increase our sales and allow us to hire additional staff, which could help address the negative reviews about slow service. However, we also need to focus on the staff’s initial training to address the complaints about rude service.
Using a recordkeeping system could help us track exactly how many ingredients we’re ordering and what food and drinks we’re selling. Knowing this information could help us plan future orders from suppliers, making sure we always have enough ingredients — particularly for the most popular items on the menu — and keeping excess ingredients from going bad. This could help us save money, which we can then put into savings.
Weaknesses and Threats (WT): Improving our overall reviews will limit the threat from competitors because we’ll grow our regular customer base.
Building our recordkeeping system and savings could also help us negotiate with suppliers, helping us compare suppliers and ask for better deals. If we can save enough money, we may be able to buy our store, which will help us avoid the threat of the landlord increasing the rent.
The business owner now has a list of strategies and actions she could take to improve her business and sales. They’re all based on the business’s current strengths and weaknesses, and the surrounding opportunities and threats.
A tactical plan will turn the strategies into actions. The plan could list the different projects based on how much they will help you reach your goal, and assign responsibilities for each project.
The restaurant owner may take on some of the work herself and start reaching out to local businesses to ask if they’re interested in catering. She could also assign some of the work, perhaps by asking one of her tech-savvy employees to start researching recordkeeping options, and asking one of the most well-liked servers to prepare a training presentation for the other servers.