Strengths, Weaknesses, Opportunities and Threats: Why You Need to SWOT Your Company
You have customers, you have a pumping truck, you have restrooms, deodorizing chemicals, a place to dump—you have all the capabilities you need to service, right? As you may know there is a lot more to becoming successful in this business than that.
According to statistics from the Small Business Administration, most companies do not turn a profit until their third year in business, and a majority are out of business by their fifth year. While no one has kept statistics on the success rate of portable restroom operations specifically, you can assume that our industry is no different than others. If lasting 5 years is a rarity, imagine the odds of lasting 15, or 30 years in business?
For those who do last, the rewards are great. You can be one of the few who make it if you are careful to monitor the business environment, watch what competitors are doing, predict what customers will want, train your employees to adapt, and be prepared to adapt your service assets according to the needs of the changing environment.
Did you know that if you drop a frog into boiling water, he will jump out quickly enough to avoid injury? However he will sit happily in a cool pan of water while you gradually turn up the heat until he is cooked! A lot of businesses are like that. It is more difficult to react to gradual change than it is to react to immediate danger. The secret is to continually monitor the water, predict where things are going, and change with the conditions.
Your capability to service is dependent upon meeting the needs of the market, selling your ability to meet those needs, and predicting what the market will want next. If the market remains the same, and your competitors remain the same, then your business can remain the same. However, conditions are rarely like that. The economy may change in your area as the local employment picture goes up or down, as the national economy changes, or as the population in your community grows, shrinks, gets younger, or gets older. Competitors may change or go out of business and new competitors with new ways of doing things can move in.
Trends can change in our industry as well. If you look at the history of the portable restroom business and how it has changed over thirty years, you can get a pretty clear picture as to where it is going. Portable restrooms started as heavy, smelly, crude plywood boxes. Then small fiberglass units took their place and it was a big improvement. Next came poly-ethylene and the toilets were lighter, better looking, odor resistant, larger and roomier. Today, sinks and flush units are becoming more popular. Will this trend continue? In Europe and Asia these amenity-filled restrooms have already become the standard.
Predicting local changes requires reading industry publications, local and national business news and guessing how trends, economic cycles, or events will affect you. New housing starts can be the big thing one year, the next it may be a large public works project like a new airport or a highway project. If construction slows down, perhaps a major festival will take its place. For most businesses, change is a guarantee. How you react to change can make the difference between prospering or becoming frog soup.
Like the frog, you already know at some level of consciousness what is happening around you. However making yourself aware of it requires some work. A great tool for analyzing the market, taught in most business schools, is called the SWOT analysis. The letters stand for Strengths, Weaknesses, Opportunities, and Threats.
You should perform a SWOT analysis at least every six months to see what it teaches you about your business and the environment for your business’s sales and service.
First create a list of Strengths: These are the positive factors that enhance your company's ability to keep current business and win future business. Examples might include employee skills, exclusive knowledge or experience, strong customer relationships, the quality of your equipment, marketing advan-tages, and monetary advantages, such as high profit margins. Think of the Strengths that separate your business from the competition.
Next make a list of your Weaknesses: These are the negative factors within your company that may hurt its ability to win future business. They might include the lack of a specific product or amenity, poor employee experience or skill-sets. Other examples could be lack of customer knowledge or having fewer monetary resources than larger competitors.
List Opportunities: These are the positive factors outside your company that could possibly be developed to your advantage and result in business above and beyond your current sales projections.
Examples might include inexperienced compe-tition, greater-than-predicted expansion of your market such as new construction projects or special events being planned, new tactics to increase profitability, unexpected opportunities to increase your company's visibility, other competitors going out of business, additional markets opening up, unforeseen favorable publicity and customer demand growing at a greater-than-predicted rate.
Threats: These are the negatives outside your company that might occur and block your company from achieving its sales projections. Examples might include being faced with an unanticipated decrease in your customer base, unexpected new competitors that are experienced or well-financed, a severe economic downturn, skyrocketing interest rates or sudden price increases such as the recent run up of fuel prices.