A SWOT analysis is a simple and useful tool to help both new and established companies develop their business strategy. So how do you conduct a SWOT analysis for an accounting firm? This article will look at the following areas:
● What is a SWOT analysis?
● Why is a SWOT analysis helpful?
● How to create a SWOT analysis of an accounting firm, section by section
What is a SWOT analysis?
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis is an exercise in listing these aspects and how they apply to your business as a means of creating an effective business management strategy.
Strengths and weaknesses will be items that are internal to your business, i.e.: things that you have control over, such as:
● What do you do better or worse than your competitors?
● What areas is your business an expert in?
● Do you have the right level of cash flow?
● What skills do you have, or lack?
● Do you have the right technology to help you manage the business effectively?
● Do you have employees, and if not, what talents would be beneficial?
Opportunities and threats are external factors that you do not have control over, and are subject to the wider market. They could include:
● Competitor activity
● The price of raw materials or supplier costs
● Market demand or trends in customer behaviour
Why is SWOT analysis helpful?
Doing SWOT analysis allows you to look at your business from different perspectives to determine where you can improve. Don’t assume you already know everything there is to know about how to run your firm.
By seeking the opinions of others to help you with the analysis, you will learn more about your business. Ask employees from several departments to get involved, or if you are a sole trader who runs their own accounting firm, then ask friends, family, your legal team or any other people who know you and your business to give you feedback on your SWOT analysis. They can be objective and may see things from a different perspective to you, which will help you get a fresh take on how to capitalise on your findings.
How to create a SWOT analysis of an accounting firm, section by section
Gather your team in a meeting to get their feedback together in one document, or ask your external contributors to give you their feedback for you to compile. Let’s go through how to fill out the document for an accounting firm.
How to set out the SWOT analysis
You can use a spreadsheet, a word document, or a flipchart and sticky notes to lay out the SWOT sections. You may want a ‘one pager’ with four sections on one page so that you can reference each item easily. Whichever way you choose is fine, just make sure it is easy to understand for the analysis stage.
In your strengths section, list the positive attributes of your business that are within your control, such as:
● What do you do successfully?
● What do you do better than your competition?
● Do you have a unique selling point? For example you may specialise in a certain sector.
● What customer feedback are you particularly proud of?
● What operational processes work really well?
● What assets do you have, in terms of knowledge, education, network and reputation?
Now list your weaknesses in a separate section. These are things that are also within your control, like:
● What do you lack compared to your competitors?
● What business processes could be accelerated?
● Is your location important to your success?
● Are there gaps in the team that could be filled?
● Are there assets (both tangible assets, like money or equipment, or intangible such as digital literacy) that you are missing, that could be crucial to your success?
Opportunities are factors in your business environment that that you could capitalise on, such as:
● Is your market, or your target audience growing? For example, maybe you have spotted a new industry that you could specialise in before any competitors do so.
● Are there new or interesting events that your firm could attend?
● Any upcoming regulatory changes that may impact your business or your clients?
Now list your threats, which are risks that could materialise. While you can protect your firm with contingency plans, you cannot prevent them from happening. These could be factors such as:
● Are there new competitors entering your market?
● Will changes in technology affect how you do business?
● Is client behaviour changing in a way that could affect you? For example, are many clients doing their accounting or bookkeeping online and is your business equipped to manage that?
● Do you have any clients in sectors that are failing or falling behind in market trends that you may lose?
Time to analyse what you’ve listed and create a business strategy. Look at your strengths and opportunities and find ways to match them up so that you can take advantage of available opportunities. Then look at how your strengths can protect you from any threats. This will allow you to tap into the potential of your strengths in a focused way.
By looking at your weaknesses you can make a plan of action of how to change those too.
Finally create a list of actions you’ll make, which will be your strategy. This gives your accounting firm a list of things to focus on for the foreseeable future that will help to achieve business growth and adapt to the future market.
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