SWOT Analysis for Home Service Businesses
An overwhelming 99% of all home service businesses are doing 5-6 figures in revenue a year according to this article.
It is most likely the biggest baddest thing you have ever owned so it can be difficult to know what the next step to take is.
That is why it is so important to do a S.W.O.T. analysis.
S.W.O.T. stands for Strengths, Weaknesses, Opportunities and Threats.
If you do a quick Google search you can find S.W.O.T. analysis’ for large corporate businesses but you won’t find much when it comes to small home service businesses, that is what this article is about.
Over the last 10 years I have been blessed to be in the rooms with some of the largest home service companies in the world.
When you’re a large organization like Neighborly, it is incredibly important to do a S.W.O.T. analysis but it is like moving a cruise ship. Like I said earlier, most home service companies are doing 5,6 and 7 figures and are more like moving a jetski. It is a lot easier for you to move but you don’t have the resources to run a S.W.O.T. analysis because it is not taught, so hopefully this article will help.
What is a SWOT analysis?
A S.W.O.T. analysis is an early stages exercise in strategic planning which identifies your competitive advantages and gaps within your organization.
It is really split into 3 different components.
First your internal, this includes your strengths and weaknesses, things that you can control. You can control your marketing message, your brand and your sales process.
The bottom half is your external, things that you cannot control but you can influence. You can’t control emerging technology or things like COVID-19. These are things that you want to be aware of, opportunities to capitalize and grow your business, and threats, things that can potentially harm your business today or in the future.
The third component is how do we leverage strengths to take advantage of opportunities and improve weakness to avoid or mitigate threats.
What is the goal of a SWOT analysis?
The goal of a S.W.O.T. analysis is to segment your business into categories and begin the process of strategic planning. It doesn’t really define a specific strategy but identifies a list of priorities and opportunities for the business to capitalize.
We talk about an early stages exercise in strategic planning, what does that really mean? I like to look at strategic planning in 3 different stages:
- Stage 1 is establishing a baseline or a benchmark. Where are you today? Before you can go from $100k – $1M you have to understand where you are today.
- Stage 2 is casting vision. Assigning where you want to be tomorrow.
- Stage 3 is the tactical part. We know what we are good at and where we want to be, now we create those processes for our organization.
We are going to start at the top with our strengths. These are internal. The beautiful thing about home service business is that we are pulling from the same bucket of information. We have our brand message, sales process, strategic partnerships etc. All of these processes are generally the same for home service businesses we just have a different deliverable that we are giving to clients.
What is one person’s strengths may be another person’s weaknesses. You may have a really dialed in marketing message, a killer website and tons of reviews that drive a ton of leads but another company may really struggle with that. You might struggle with sales and getting a higher average ticket and another company might excel in that area.
So I am going to give you some resources and just some general ideas for you to start with your S.W.O.T. analysis but a good exercise that you can start with generally is just to document your customer journey. It is a cool exercise and you can start to see and highlight these areas.
The most important thing to do!
If you only take one thing away from this let it be this. In a S.W.O.T. analysis make sure that strengths and weaknesses are based on a process not a person.
If you are a solopreneur and you’re out there doing it yourself and you’re really good at what you do, is it based on a person, you, or is it based on a process. If you have got a rockstar office manager that is killer at scheduling, dispatching, etc and it is because of them and they left your organization, would that strength become a weakness? So if you do have that situation, how can we turn that strength, person, into a process? This is how we create a win-win in our organization. If we have a process documented that we can train people in, that is a win. We complement the people with our process to excel even further.
So as you go through this exercise ask yourself, is this a strength or is this a weakness because of the person that is in my organization or because of the process that is documented.
As a businessperson, as an entrepreneur or goal is to level up every single day but it’s also to make sure that those people within our organization are also rising up. Otherwise they’re in a dead-end job so how can we cast vision not only for ourselves and our sales but also cast vision for our employees to make sure they know they have a future and have future growth within our organization.
So that is the goal of strengths and weaknesses, they’re internal and it is based on a process and not a person.
External factors: Opportunities & threats
Now let’s talk about our external factors, our opportunities and threats. Again, these are things that we cannot control but our business can influence.
We want to take a look at what is looming. Is there emerging technology, is there a rising competitor that is adding services, is there a changing demographic, is there an economic uncertainty. Again these are things that we can’t control but we want to be aware of so that we can leverage our strengths for opportunities and hedge or even remove threats based on the way we see them in our organization.
Create a SWOT analysis for your business
Strengths & Weaknesses
It starts with your strengths and weaknesses. Remember we talked about our customer journey and documenting each one of those phases of the customer experience and highlighting the strengths based on a process and weaknesses. Below is a list of things you can consider for strengths and weaknesses:
If you want more if you’re really struggling to come up with some ideas, here are a couple of resources that I really like to give clients.
The first is a business snapshot report. It is over 40 questions going over all the parts of your business from marketing, admin, production and sales. You can find the business snapshot report here: Download Business Snapshot Report . Anything you score yourself really low on might be considered a weakness and anything you score yourself high on might be a strength.
The other one is one of my favorite documents and it is called The 5 Stages of Business Growth. As we ascend through our entrepreneurial journey in home services the challenges and things that we do are different during stage 1 through 5. So this is a really good overview of how your business scales from beginning to end and also a tool that you can use to identify those strengths and weaknesses depending on where you are in your business.
So we want to highlight and emphasize these strengths and weaknesses. The SWOT analysis is intended to be holistic, it’s not defining every single thing that we do as a strength and weakness but really highlight 3-10 different areas that you feel like you really excel and things that you want to make sure that you shore up.
Opportunities & Threats
Remember these are the external. Here is a list of opportunities and threats that you can use:
We don’t have any resources for opportunities and threats because it is always changing but just general funding options, state of the economy and others you see on the list. Things that you can consider as influences, not control but outside of your control influences on your business.
And again on the third and most important phase is how we can look at the relationship with our opportunities and threats and our strengths and weaknesses. How we are going to take those weaknesses in our organization and make them strengths based on the opportunities that we see or the threats that we want to remove.
So that is the whole goal of the external is how do we take what we have already in our control within our organization and leverage the influence to take advantage of or mitigate and hedge.
So here is an example of a completed SWOT analysis for a home service business:
I ran through this exercise with one of my coaching clients. We did this as the first stage in strategic planning. So go through this and make sure that you have some action or have some next steps. Just because you do a SWOT analysis doesn’t mean anything. It doesn’t identify any strategy, it just benchmarks and sets a baseline for where you are today. This is the catalyst for our strategic plan, this is where we start our strategic planning exercise. Knowing where we want to be tomorrow is influenced by where we are today. You can’t go from $100k to $100M if you don’t have any cash in the bank to grow. You have to know exactly what your strengths and weaknesses are, which is going to help propel you in your strategic plan.
So the first phase is benchmark, where are you today? The second phase is casting vision, where do you want to be tomorrow? The third is execution, how do you get there?
That’s a wrap!
So that is the strategic plan for your home service business! I hope you take advantage of and capitalize on it.
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