What Is a SWOT Analysis

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S.W.O.T. is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT Analysis is an organized list of your dealership’s greatest strengths, weaknesses, opportunities, and threats. The purpose of a SWOT Analysis is to help you develop a strong business strategy by making sure you’ve identified and considered all of your dealership’s strengths and weaknesses, as well as the opportunities and threats it faces in the marketplace. Strengths and weaknesses are internal to the company. You can change them over time, but not without some work. Opportunities and threats are external — they are out there in the market, happening whether you like it or not. You can’t change them.

Who Is a SWOT Analysis for?

 

Existing dealerships can use a SWOT Analysis at any time to assess a changing environment and respond proactively. In fact, we recommend conducting a strategy review meeting at least twice a year that begins with a SWOT Analysis. New dealerships should use a SWOT Analysis as a part of their planning process. There is no “one size fits all” plan for your dealership business, and thinking about a new dealership in terms of its unique “SWOTs” will put you on the right track from the beginning, and save you from headaches later on.

The Best Time to Conduct a SWOT Analysis

 

Now you know you have every reason to conduct your SWOT Analysis, the next question to ask is when is the right time to do it? Here’s the short answer.

 

• At the beginning of the year. As a new year begins, it’s natural to review the past year and look ahead. By conducting an analysis at the beginning of a new year, you’ll be ready to make decisions in the coming months.

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• Do an annual check up. Just like you should visit the doctor annually, your SWOT Analysis should get a check-up at least once a year, too. You’ll be amazed how much can change within a year. You might not need to conduct the analysis from top to bottom again, but you should at least set aside a day to review it and make updates.

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• Do a SWOT Analysis when a shift occurs. If something big is changing at your dealership, with a competitive dealer, or in the retail automotive business in general, it’s time to do a new SWOT report. When a noticeable change happens, it’s always a good idea to reevaluate where your dealership business stands.

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• A SWOT Analysis is vital for potential dealership acquisitions. If you’re planning to acquire or open an additional dealership, conducting a SWOT Analysis is a great way to check the viability of your idea.

How to Conduct a SWOT Analysis

Now that you know what a SWOT Analysis looks like, the next step is conducting your own. To get the most complete, objective results, a SWOT Analysis is best conducted by a group of people with different perspectives and stakes in your dealership business. Management, sales, customer service, and even customers can all contribute valid insight. Moreover, the SWOT Analysis process is an opportunity to bring your team together and encourage their participation in, and adherence to, your company’s resulting strategy. A SWOT Analysis is typically conducted using a four-square SWOT Analysis template, but you could also just make lists for each category. Use the method that makes it easiest for you to organize and understand the results. Business planning expert Tim Berry recommends holding a brainstorming session to identify the factors in each of the four categories. Alternatively, you could ask team members to individually complete a SWOT Analysis and then meet to discuss and compile the results. As you work through each category, don’t be too concerned about elaborating on ideas at first; bullet points may be the best way to begin. Just capture the factors you believe are relevant in each of the four areas. Once you are finished brainstorming, create a final, prioritized version of your SWOT Analysis, listing the factors in each category in order from highest priority at the top to lowest priority at the bottom.
 

Create Your SWOT Analysis in 5 Steps

1. Identify Your Strengths

 

Before you start listing your strengths, let’s define the parameters a bit. Strengths are positive internal factors that are within your control. Think of the experience and resources that are available to your business. Here are a few categories to think about:

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• Financial Resources -- Revenue streams, Asset management, Investments

• New Vehicle Automotive Franchise(s)

• Physical Items -- Land, Buildings, Equipment

• Relationships with Industry Networks and Vendors

• Intellectual Property -- Trademarks, Copyrights, Advertising strategies

• Human Resources -- Managers, Employees, Advisors, Mentors

• Employee Programs -- Any programs that help your employees excel

• Dealership Workflow -- Your processes and how things get done

• Dealership Culture -- The environment that your company has created

• Dealership Reputation -- How your business has grown its reputation

• Market Position -- How your dealership is ranked in the marketplace

• Growth Potential -- How your dealership is positioned for future growth
   

2. Identify Your Weaknesses

 

Every automotive dealer wants to believe his or her business is running smoothly, so this part of the exercise might not be your favorite. However, it’s vital information. You need to truthfully access the weaknesses within your dealership for this analysis to be effective. Within a SWOT Analysis, weaknesses are internal factors that take away from your business or leave you at a disadvantage. Note: The same categories that applied to your strengths column can be re-applied here.

3. Identify Your Opportunities

 

Opportunities, as you might guess, are factors that can contribute to your growing success. These factors are typically outside of your control, which is why they are considered external factors.
Here are a few categories to consider when looking for business opportunities:

 

• Economic Trends -- Look at the economy in your area

• Market Trends -- Your target market could be experiencing new trends that could open doors for your business

• Funding Changes -- Interest rates, Lease plans, Finance Term, Capital availability

• Political Support -- Positive changes in political ties.

• Government Regulations -- Changing regulations that might afford you new opportunities.

• Changing Relationships -- Consider shifting relationships with vendors, partners, or suppliers.

• Target Audience Shift -- Your target market might be expanding, aging, or shifting.
   

​4. Identify Your Threats

 

A threat to your company is an external factor, something that you can’t control, that could negatively impact your business. You may be thinking, if threats are outside of my control, why should I spend time identifying them? By knowing your threats, you might be able to find a strategy to minimize them, or at least, come up with a plan to handle them in a way that won’t shut down your business. Identifying threats is all about being prepared and taking proactive steps to minimize the hurt. Coming up with a list of threats can be difficult. These issues don’t spring to mind as easily as your strengths, but there are certain categories that most external threats fall into. Note: The same categories that applied to your opportunities column can, at least to begin with, be re-applied here. Once you’ve listed your threats, your SWOT template should be filled in. You’re almost done!

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5. What’s Next? From SWOT Analysis to Strategies
 

A list of strengths, weaknesses, opportunities, and threats makes for a handy business guide, but you’ll want to take this exercise one step further to create strategies and plans to improve your dealership. The exercise you’re about to do is called a TOWS analysis (SWOT backwards). It helps you make connections between each quadrant of your analysis. You’ll work around the square, combining information from two quadrants to create actionable strategies. Here’s how:

 

• Strengths – Opportunities...Use your internal strengths to take advantage of opportunities.

• Strengths - Threats...Use your strengths to minimize threats.

• Weaknesses - Opportunities...Improve weaknesses by taking advantage of opportunities.

• Weaknesses - Threats...Work to eliminate weaknesses to avoid threats.
   

The following questions will help you visualize the purpose of this exercise:

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Which of the company’s strengths can be used to maximize the opportunities you identified?
 
How can you use the company’s strengths to minimize the threats you identified?

What action(s) can you take to minimize the company’s weaknesses using the opportunities you identified?

 

How can you minimize the company’s weaknesses to avoid the
threats you identified?

 

As you answer these questions, you’ll start to create actionable strategies. For example, if one of your strengths is that you have a talented creative writer on your vehicle sales team, you should put that person in charge of writing the compelling descriptions for your pre-owned vehicle listings on the Internet. That’s a strategy that you can implement immediately to improve your business. You can simply add a few blocks to your SWOT Analysis to get these strategies down on paper.

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Your Finished Product

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When you’re finished with the SWOT and TOWS analysis, you’ll have an insightful look at your dealership, that is accompanied by a list of strategies that you can implement to better your business. Take this list of strategies and start implementing them. If some strategies are long-term plans, break them into steps, and put each one on your calendar so you can implement the change over time. Now that you have this dealership resource, you’ll want to keep it handy. Hang it on your office wall, or keep it on your desktop, so you can reference it throughout the year, as you make decisions. Your hard work has paid off. Aside from strategic plans, here are additional benefits from creating a SWOT challenge:

 

• Improved Focus -- This analysis should put everyone on the same page. It identifies what you should be working toward this year.

• Conversation Starters -- With everyone working on the same goals, managers and employees can continue to build strategies.

• Identify Unknown Aspects -- You’ll likely discover aspects of your dealership business that you didn’t know about. From unknown strengths to hidden threats, uncovering this information will help you move forward.

• Strategies for Success -- Above all else, you walk away with strategies to help your business.

 

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