Every business encounters threats that come from the competitive landscape in which they operate. They are external factors which can hinder your business growth. You may have already experienced this in the past, and you’re bound to experience it in the future as you grow your business and reach new markets.
In this module, you’ll look at the aspects that can put your business in danger to make sure you are aware and take steps to prevent threats from overtaking your business.
Face the Threats
You need to stay informed about trends in your industry or market sector which might prove a threat to your business. Imagine you’re a freelance photographer: if you don’t want to use a digital camera, your business can’t survive in today’s highly digital world.
“Threats” in this context are things you don’t have direct control over. These can include:
- Regulatory environment
- Economic conditions
- Environmental effects.
Threats can also come from your competitors, current and new.
You need to know who your competition is and what they are up to, as changes in their businesses can affect your own. For example, if your direct competitor suddenly slashes their prices in half, you’ll have to find ways to compete more on value. Or, if a new competitor has arrived on the scene who is offering the same value proposition, you’ll have to figure out a way to stand out differently.
Other threats can include:
- Changing customer demands
- Developments in technology
- Cheaper global competition
Are these apparent in your industry? Don’t despair because, once recognized, some threats can be turned to opportunities. Think of the threat that television posed to the movie industry as people stayed home and no longer went to the movies. Then think about the huge entertainment giants like Netflix and HBO who have met the challenge by providing different ways to deliver their product.
When you’re faced with a threat, don’t ignore it. Be open to the possibilities it might bring.
Questions to Ask Yourself
These questions will help you identify the external conditions that could affect your business’s performance:
- What problems do you face?
- What are the strengths of your biggest competitors?
- What are your competitors doing that you are not?
- What’s going on in the economy that might affect your business?
- What developments are happening in your particular industry?
Flag the evidence you need to pay attention to. For example:
- Spotting technology changes which could alter the way you provide your goods and services
- Tapping into the local, national, and global markets trends for similar businesses to yours.
Review the S.W.O.T. Analysis
Now that you’ve completed the four quadrants, it’s time to look at them all together. Find ways to combine the data you’ve amassed to give you even more insight into your business, e.g.
- How you could put your strengths and opportunities together to identify areas for growth
- How some of your strengths could cancel out some of the threats
- Look at your weaknesses and opportunities to create a list of areas ready for improvement
- Examine which areas of weakness and threat you could turn to your advantage.
Write down your thoughts. You’ll use these insights when you create your Business Growth Plan in Module 11.
- All businesses have external threats to contend with that are outside their immediate control.
- Awareness of these outside factors will help you to find ways around them.
- Quick Win: When you think of threats to your business, what’s your greatest fear? How might you turn this around and reap the benefit?
- Ask yourself the questions listed in your Action Guide to tackle the threats to your business.
- Complete the four quadrants of the SWOT matrix in the Action Guide with your main points for each.
- Ask yourself the questions listed in your Action Guide to analyze all four quadrants and combine the data to give you more insight.