Lagerquist Accounting Blog
Read the latest blog articles from Lagerquist Accounting and Advisory.
Subscribe for Blog Updates
Recent Blog Articles
How an Outsourced CFO Can Help You Establish Accounting Practices To Minimize Risk and Maximize Profit
An outsourced CFO can provide your small business with the accounting services and financial management advice you need to successfully navigate from your break-even point, so you can maximize profits and boost ROI.Read more
Leveraging the Expertise of an Accounting and Advisory Firm to Support and Optimize Your Accounting System
This fourth article in our series outlines the benefits of partnering with an external advisory firm in optimizing your business finances. We look at the comprehensive services offered by outsourced accounting specialists and how they can support your in-house teams and processes toward ideal results throughout the work year. Bookkeeping is an essential aspect of […]Read more
Your Accounting and Advisory Firm Can Help You Avoid These 5 Major Pitfalls
Lagerquist’s third part of an in-depth blog series explores how partnering with a reliable external accounting and advisory firm can help your company avoid five of the biggest pitfalls faced by businesses. External accounting specialists provide extensive real-world experience that help companies navigate the most significant financial challenges with minimal guesswork.Read more
Small Business Strategic Planning Using the Grove Model: Step 3 – Creating Your SWOT (or SPOT) Matrix
Posted by Lagerquist Accounting & Advisory
The Grove Strategic Visioning Process is key to helping small businesses utilize strategic planning effectively. Purposeful use of the process helps drive critical changes that will benefit small business leaders today and for the future of their business.
This process has five key stages essential to strategic planning. In previous installments, we have already covered the first two: examining your history and mapping the context. In this article, we’ll explore the third step: creating your SWOT or SPOT matrix. Let’s jump right in.
What is SWOT/SPOT?
SWOT matrix (short for Strengths, Weaknesses, Opportunities, and Threats) is a common tool used to do strategic analysis (SWOT analysis). It is widely used compared to other analysis tools and methods available to small businesses.
The terms SWOT and SPOT are often used interchangeably and stand for the following:
- S — Strengths
- W or P — Weaknesses or Problems
- O — Opportunities
- T — Threats
The Grove Model refers to this matrix as SPOT. However, most strategic planning tools you will come across refer to it as SWOT. Whichever terminology is preferred, effective use of this process allows you to determine the direction in which you want to take your business.
What does SWOT/SPOT entail?
The SPOT analysis entails analyzing both internal and external environmental factors to form a comprehensive internal analysis of your Strengths, Problems, Opportunities, and Threats. It is called an internal analysis because an organization leverages it to understand how to look at itself.
Through this analysis, an organization can determine its capabilities and weaknesses. Further, the analysis helps in identifying potential opportunities to be capitalized on and threats to be mitigated.
It is through this analysis that you will be able to reach decisions in regards to planning, strategy, and how to better advance your business to the next level of success.
Factors to consider
Considering your internal environment means taking into account your company’s strengths and weaknesses/problems. This is known as internal environment analysis and should be undertaken with care, as too quick an analysis can lead to a business thinking it has fewer weaknesses and greater strengths, or vice versa.
Your opportunities for advancement as well as threats to your company’s viability and profitability make up the organization’s external environment. Opportunities include favorable government policies and booming markets, while threats can be emerging competitors or an economy in recession.
For your business to grow, it needs to examine all four quadrants of the matrix and leverage the results to shape its growth decisions.
What steps should you take to complete a SWOT/SPOT matrix?
Step 1: Determine the strengths of your business
The very first step when doing a SPOT analysis should be to determine the strengths of your business. What are you capable of? What advantages do you have? Be sure to take into account not just your value proposition as it relates to your products or services, but the intellectual capital of your team.
Step 2: Determine the weakness of your business
Once certain about your strengths, the next step is to determine which problems are within your business that, unchecked, could prove a disadvantage to you. Knowing your shortcomings helps in deciding which opportunities to say no to, and which areas to focus on with increased training, process improvement, and marketing initiatives. Remember that your weaknesses can become growth opportunities!
Step 3: Determine the opportunities for your business
Step three involves determining which opportunities are available to your business, and which to focus on as priorities. Refer back to your strengths to help you determine when to explore the opportunities that come your way.
Opportunities can arise as a result of innovation, advancements in the industry, partnerships, mergers and acquisitions, economic shifts, evolving consumer trends, and more.
Step 4: Determine the threats to your business
The last step of SPOT analysis involves determining the threats facing your business. Threats can arise from many different factors, from a competitor releasing a new product that rivals yours to world events like a health crisis impacting the ability to operate your business. Having a true understanding of where you are vulnerable provides critical insight into making your organization crisis-proof, or at least agile enough to adapt in a crisis or challenge.
Benefits of conducting a SPOT analysis
The benefits of conducting a SPOT analysis are many:
- Helps in decision-making: SPOT gives you the clarity you need to make better informed decisions.
- Helps conduct internal analysis: Analyzing yourself is key to your growth.
- Helps improve your weaknesses: You can’t improve what you don’t know. This analysis unearths problems within your business, making it easier to address them.
- Helps determine the threats you need to act on: To remain viable and competitive, it’s important to understand where you are vulnerable.
- Helps in adjusting your strategy: A SPOT analysis makes it easier to adjust your strategy after looking at your strengths, weaknesses, opportunities, and threats.
SPOT analysis as part of the Grove Model is vital in keeping your business on track, and understanding how to execute it is equally essential for growth. Lagerquist Accounting & Advisory understands the importance of strategic planning and is here to offer support to small businesses. Need a hand? Get in touch today to learn more about how we are helping businesses achieve their goals.
Image Credits: Photo by Royalty Free Illustration on Rawpixel
Lagerquist Accounting Blog
Welcome to the Lagerquist Accounting & Advisory Blog.