Do you already know how to determine your strengths, weaknesses, opportunities and threats? Learn more about SWOT analysis – one of the most useful tools for your cannabusiness.
If you are into the cannabis-related business, you already understand how flexible you need to be. Many entrepreneurs do not pay enough attention to analyzing their companies and market performance, assuming that analytics requires a lot of investments. However, this is not always the case. Still, before making any changes in your existing or prospective marketing strategy, it is essential to meticulously analyze all the strengths, weaknesses, threats and opportunities. Fancy to know how to do it properly? Learn about the SWOT analysis, easy and effective tool that will save you time, money and effort.
What is a SWOT analysis?
A SWOT analysis is one of the most common and easy-to-use types of business analysis. It helps to identify internal and external factors that influence the success of your company. A SWOT business analysis allows you to evaluate a company’s business based on four factors:
S - Strengths
Competitive advantages of your enterprise. Examples may include:
- low cost of production;
- a close-knit community of brand fans;
- high Key Performance Indicator email newsletters.
W - Weaknesses
Internal factors that impede business growth reduce your competitiveness. Examples may include:
- insufficient number of support staff;
- lack of configured trigger mailings;
- high cost of attracting a client.
O - Opportunities
External factors that can positively affect business growth. Examples may include:
- improving the position of the site in organic search results;
- competitors leaving the market.
T - Threats
Negative external factors that may adversely affect the further development of the enterprise. Specific examples for the cannabis industry include:
- market size reduction;
- introduction of a new, large competitor with many advantages;
- state regulations restricting business operations.
SWOT Analysis: How to Do It Right
Using the following five steps will help you to complete a high-quality SWOT analysis:
Step 1. Highlight special questions for analysis.
You need to identify and answer basic questions about your cannabis business. The answers to these questions will highlight the most relevant information to guide the future operations of your business.
Example questions to identify strengths:
- What is our main competitive advantage?
- Where do we surpass our competitors?
Example questions to identify weaknesses:
- What advantages do our competitors have?
- How are our competitors superior to us?
Example questions to identify opportunities:
- How can the current political and economic situation contribute to our business growth?
- What external resources could help accelerate our development?
- How can current market trends benefit us?
Example questions to identify threats:
- What new market players are potentially dangerous for us?
- What new products and technologies may be more attractive to users than ours?
- Can market trends adversely affect our business?
Step 2. Create a SWOT analysis table
Use a table (matrix) to structure the responses to the questions above into four blocks for strengths, weaknesses, opportunities, and threats. Enter all the identified factors into the SWOT matrix in the appropriate blocks, ordered in lists from high to low importance.
Step 3. Search for strengths and weaknesses
Identify the main internal factors that influence the success of the company. Factors in which your company is stronger than competitors are strengths, factors in which your company is weaker than competitors are weaknesses. Sort the data so that those factors most likely to affect the final profit are at the top of the list.
Step 4. Find growth opportunities
Rate the external factors that are likely to positively affect the level of sales, from highest influence to lowest. Exclude all factors which do not affect the final profit or customer loyalty level.
Step 5. Search for threats to your cannabis business
Try to identify what might lower your company’s income. Remember that external factors are threats, although not under your control; you can’t influence them. Rate the threats according to their degree of influence on the level of sales and exclude from the list threats, which are unlikely to affect profit or customer satisfaction over the next five years.
How to Use a SWOT Analysis?
Use the SWOT analysis to clearly define the main goals of your cannabis-related business. Analyze the advantages, disadvantages, opportunities and risks before building your marketing strategy and offering prospective clients your services.
In the SWOT analysis, only consider significant factors. For example, a delivery price which differs by a couple of cents from that of the competitors is not an advantage/strength of your company.
Here are some rules to take into account for a successful SWOT:
- Conduct research into each market segment, department, and product for more objective results.
- Do not confuse opportunities with strengths/advantages and threats to weaknesses/disadvantages. Advantages and disadvantages are internal factors of your organization. You can control them. Opportunities and disadvantages/threats are external uncontrollable factors.
- Identify strengths and weaknesses from the point of view of the buyer. Conduct interviews or surveys among clients to verify your assumptions.
- Use precise, unambiguous language.
- For each weakness or threat, try to identify ways to eliminate or minimize it. For each strength and opportunity, identify ways to optimize and build on it. Record all data in the decision matrix.
A Detailed SWOT Analysis Needs You to Do Your Homework!
Before conducting analysis, you need to study the cannabis market where your company operates. Particular attention should be paid to your target audience to clearly understand the "pain" of a potential client and to orient your business to satisfy the needs of the user, rather than just selling him or her your product. This is a key factor in building long-term relationships with customers. Further, you need to identify the main competitors and analyze their companies from the perspective of a potential customer. Based on this, you can highlight your own company’s strengths and weaknesses.
SWOT Analysis Example
In order to help you to get to grips with a SWOT analysis, below is an example of the analysis for cbdee, an online CBD retailer. This company sells all types of CBD products, so the SWOT analysis provides a good example relevant to the broader cannabis market.
- Top positions in Google search results for relevant key queries provide 80% of traffic and 70% of conversions;
- Qualified personnel;
- Great logistics;
- Self-importing products of certain brands provide a low cost.
- The mobile version of the website is too slow and clunky, unlikely to retain customers;
- No remarketing in Google Ads;
- Many clients aren’t clicking on the final purchase button, (i.e. they are leaving the website before purchasing).
- Stable development of the e-commerce market is likely to increase the total number of sales in the cannabis industry;
- The new educational YouTube channel on cannabis may increase brand awareness and increase traffic to the site.
- New competitors on the market;
- Low level of cannabis education of people generally;
- Political and governmental issues.
In this example, factors that might affect the company’s performance in the market are sorted by level of importance. The main goal after SWOT analysis is to correctly interpret the data obtained to reapply it going forwards. This helps to address difficulties and ensure further business development. For cbdee, the following conclusions can be drawn from the most important criteria:
- The company should continue engaging in search engine optimization because it is the most effective traffic channel.
- The mobile version of the site is certainly worth updating. This is guaranteed to affect the conversion rate from mobile devices and the total number of purchases.
- There is no need to go offline because the market is developing steadily.
What to do next?
Having drawn up your SWOT analysis, you are able to transform it into the working marketing strategy. The analysis provides the foundation for your next steps; it will provide all the data needed for penetrating the cannabis market or defending and improving your existing market position. However, it would be also a wise step to conduct separate market research to get deeper on the prospective niche, pricing, competitors, brand awareness, etc.
Studying your strengths helps you to understand how you can apply the advantages of your business to win business over your competitors. Similarly, identify opportunities allows you to seize them. Further, your strengths may be the solutions to eliminating threats represented in the cannabis market. All this analysis helps to craft a list of actions, which a business owner can consider maximizing profits and gain a stronger foothold in the market.