A SWOT analysis—an assessment of a company’s Strengths, Weaknesses, Opportunities, and Threats—is more than marketing jargon. It’s a simple tool for identifying what your business has going for it and against it. Doing a SWOT exercise won’t magically solve major problems, but it will help you gauge the health of your business and give you useful insight so you can plan a bright future.

What might a SWOT reveal for a small contracting company?

• Strengths—Superior craftsmanship; specialized knowledge of decking; reliable, local suppliers
• Weaknesses—An overwhelming workload; less-than-ideal margins on certain projects
• Opportunities—A lot of homeowner interest in enhancing outdoor living spaces; new technology to make administrative tasks less time-consuming
• Threats—Lack of experienced workers for hire; supply chain unpredictability

Through a SWOT, you can identify factors that are in your control and the influences that are beyond your control. From there, you can begin to think about how to leverage your strengths and mitigate your weaknesses to seize opportunities and minimize threats.

The SWOT concept is nothing new or fancy. It’s a common-sense way to look objectively at your business and recognize its potential. The key is to not just identify your strengths, weaknesses, opportunities, and threats but also to take action on what you learn so your business can succeed.