The Benefits of a SWOT Analysis.
When was the last time you analyzed your practice from a business perspective? If you haven’t done it lately, now is a good time. A simple and fast way to analyze your practice is with a SWOT analysis. This analysis is a tried-and-true way to assess your business and its potential. Simply stated, a SWOT analysis is done by analyzing the strengths (S), weaknesses (W), opportunities (O), and threats (T) of your business. If looking at your practice from this perspective makes you nervous, don’t sweat the SWOT. We’ll help you get started.
Although scholars debate the history of the SWOT, many researchers credit Albert S. Humphrey (1927–2005), an American management consultant at the Stanford Research Institute, with creating the technique in the 1960s and 1970s. At the time, Humphrey reportedly used data from several different companies and evaluated them in terms of four categories—Satisfactory, Opportunity, Fault, and Threat. Eventually, the term “Satisfactory” evolved into “Strengths,” “Fault” evolved into “Weaknesses,” and the first SWOT analysis was born.
According to ProvenModels, a web-based library of management models, “The SWOT framework was first described in detail in the late 1960s by Edmund P. Learned, C. Roland Christiansen, Kenneth Andrews, and William D. Guth in Business Policy: Text and Cases.”
Every successful practice should take time to evaluate its business—so that they are not just reacting to challenges but thinking proactively about what opportunities are available. A SWOT analysis is a good, simple way to start identifying areas of growth for your practice.
To get the most out of a SWOT analysis, it’s best to have a specific goal in mind. The challenge with a general SWOT analysis (without a clear goal in mind) is that the team will often focus on challenges or perceived weaknesses, and it may turn into a therapy session instead of a business analysis.
If you have a specific goal in mind, every strength, weakness, opportunity, and threat is related to the goal you want to achieve. Once that goal is identified and articulated, the team can see the vision of something bigger—they will see how a specific SWOT characteristic fits within the context of the broader goals for the company.
Team members who are not connected to the goals of the practice tend to perform the minimum amount of work required for their jobs. But once team members know how their role contributes to the goals of the practice, they often perform “discretionary effort”—meaning they are motivated to perform beyond what is required of them on a daily basis. Defining the goals for the practice can transform your business.
Examples of specific goals for a SWOT analysis may include the following:
1. How can we optimize our efforts to get new patients to our practice?
2. Are we retaining new patients?
3. Do we have a strong recall system?
4. Do we have a low cancellation rate?
5. Are we closing on large treatments?
6. Are we following through with pending treatments?
7. Do we have collections that are below 98 percent?
Focus on one opportunity, one strength, or one weakness at a time; otherwise all the information can be overwhelming to the team. Also, it’s important to include members of your team in the process, because when team members are involved, they add unexpected insights and honest feedback.
In Nicole Fallon Taylor’s article, “SWOT Analysis: What It Is and When to Use It,” (Business News Daily), Andrew Schrage (founder and CEO of Money Crashers, an online finance community) recommends doing a formal SWOT analysis. Schrage said, “Some small business owners make the mistake of thinking about these sorts of things informally, but by taking the time to put together a formalized SWOT analysis, you can come up with ways to better capitalize on your company’s strengths and improve or eliminate weaknesses.”
On the Road
For more than a decade, I have traveled with Dr. Dick Barnes, visiting practices and building relationships with doctors and their teams. At Arrowhead Dental Lab, our goal from the very beginning has been to help dentists become better and more productive. Dr. Barnes has a genuine interest in knowing how each practice is performing, and part of his philosophy is sharing what contributed to his success with his colleagues.
When we visited each practice, Dr. Barnes inevitably asked each dentist, “How is your practice doing?” It’s amazing how that simple question led to great conversations and sharing of experiences of successes and failures.
These discussions generated ideas on how to increase new patient flow, increase patient retention, and improve case acceptance—all topics necessary for a dental practice to be a healthy, thriving business.
Dr. Barnes mentioned in his article, “Visions for Leadership” that in the situation of a practice not doing well, or performing below expectations, he always asked, “Why are you doing things the way you’re doing them?” If a doctor didn’t know how to answer that question, or if the answer was, “We do it that way because we’ve always done it that way,” then the response was remarkably simple: “No great discoveries come about unless we break from traditional thinking.” It is time to take another look at your business.
A SWOT analysis is a tool to start thinking strategically, and to break from traditional thinking. And you will discover all the possibilities that are waiting for you.
Every SWOT analysis should follow some basic rules. Keep reading for five rules to consider:
1. Have a Specific Goal in Mind.
As mentioned, be as specific as possible with the goals for the SWOT analysis. Make sure your team members all understand the goals and how the questions that you ask the team contribute to achieving that goal. It is important that all participants know not only what they are doing, but why they are doing it.
2. Involve Your Team Members.
Getting input from the entire team is critical and will inevitably drive discretionary effort. Everyone feels involved. You will sometimes find that what one person sees as a strength, someone else may view as a weakness. For example, one person may look at the practice’s website and think it’s great. However, others may look at it and say, “We have too much information on the website. Can we streamline the information to make it easier to understand?” Team members may offer insights on things that the dentist isn’t aware of or didn’t realize were strengths or weaknesses. It’s a good opportunity to listen and learn.
3. Start by Discussing Strengths.
Start a SWOT analysis by talking about strengths. When you identify strengths with your team, they’ll give a lot of good feedback—such as having a great location, the kind of services you offer, the kind of technology you offer, a great team/patient relationship, the quality of people who work for you, and the products and services you provide.
Many practices are good at acknowledging strengths, but it can be difficult to identify (and therefore acknowledge) “weaknesses.” Don’t let that hold you back, though. Because through “weaknesses,” you often discover strengths.
Try to keep your team focused on strengths, but if they start discussing perceived problems, don’t take the those criticisms personally. You have to identify a problem before you can offer a solution.
Keep in mind that the categories in this analysis can be somewhat fluid because many things depend on circumstances and context. For example, having a surplus of new patients can be a perceived strength and also a perceived weakness. It may also become an external threat if you don’t take care of your patients appropriately and they become detractors.
Usually, teams offer a lot of input. It’s amazing how involved teams will get in this exercise. They will surprise you with how much they know.
4. Plan On More Than One Meeting.
To properly analyze the business, plan on about three lunch meetings (usually about one hour each) with your team. During the first meeting, explain the process and articulate the goals or specific focus of the SWOT analysis. In the second meeting, identify characteristics and ask questions (see SWOT worksheet, below, for suggested questions). The final (third) meeting is a strategic planning meeting to address the direction and goals for the practice.
In any business, team members can get caught up in everyday tasks, so it’s difficult to think in terms of what’s going on around you—what your competition is doing or what the guy down the street is doing. The SWOT analysis is a good opportunity for dentists to look at the bigger picture as well as to take a step back and analyze their practice internally.
5. Write It Down.
It’s important not only to talk about these issues, but to write them down! Once you have these ideas on paper (or on a computer or whiteboard, etc.), you can refer to them and be reminded of what needs to be done. Also, assign activities in order to achieve your goals.
The purpose of the SWOT analysis is to develop a dialogue with your team members so they can be aware of what is going on with your practice as well as your competitors. This particular analysis is not a difficult project—it’s especially easy when you follow a template (download sample worksheet, below).
With a SWOT analysis, you will look at internal elements (strengths and weaknesses) and external elements (opportunities and threats).
Strengths are positive internal resources and capabilities. Think about the following questions in terms of your practice:
• What do you do better than your competition?
• What unique services or skills do you possess?
• What sets your practice apart from others nearby?
• What are characteristics that make your business unique?
• Why do patients refer others to your practice?
The strengths of each practice will be different. For example, a practice may have a large patient base or the reputation of being gentle. Or perhaps a practice is staffed by experienced dentists. Another strength may be that the practice is located in a particularly good locale. Strong leadership is a great strength, as are flexible staff members who are open to improvements in technology and training. Strengths can also include practical elements—like the soothing or ergonomic design of your office.
Weaknesses are any internal problems that keep you from achieving your goals. Strengths, such as having many new patients, can become weaknesses if they are not handled well. It’s sometimes difficult to talk about weaknesses, but remember that every practice has room for improvement somewhere. Defining your weaknesses helps you find areas to improve your practice. Consider the following questions:
• What does your competition do better than you?
• What areas could you improve in?
• Why do you lose patients?
• Have you noticed any problems during the daily schedule that keep recurring?
• Do your website and social media presence represent your practice well?
• Is cash flow a problem?
• Are your collections below 98 percent?
A few years ago I talked with a dentist who wanted to learn some new skills, but said that he couldn’t take any extra continuing education classes because he had so many new patients. I responded that it was great to have a surplus of new patients, but I asked if he was presenting comprehensive treatments.
This dentist saw five to seven new patients every day but was stuck doing “drill-and-fill” dentistry. Under such circumstances, the dentist is so busy, he or she likely doesn’t get to spend quality time with any patients.
With so many new patients, it limits the opportunities to discuss the comprehensive treatment that will help the patient avoid future problems. The dentist likely doesn’t have time to develop a relationship with the patient so the patient can understand why larger comprehensive treatment may be necessary.
Opportunities are external possibilities for the future. Use your strengths to identify opportunities. Consider the following:
• What trends and conditions could benefit your practice?
• How can you maximize the practice’s strengths?
• What does your practice offer that your competitors don’t offer?
• What technologies are available in the dental industry that would help you?
The greatest opportunity that a lot of people complain about is insurance. Dr. Barnes said that he “likes insurance and dislikes insurance.” He likes it because it is a great opportunity for patient acquisition. However, he dislikes it because insurance dictates the amount the dentist can charge for treatment. The opportunity is great, though, because as you build a relationship of trust with new patients, they will be loyal and accepting of treatment that may be above and beyond what their insurance covers.
Opportunities can come from anywhere. An overall growing economy can create opportunities for your practice. Your community (if it’s growing or offers incentives of some sort) can also offer opportunities.
Keep in mind that sometimes opportunities can look like threats. It may seem like a threat to your business to have corporate dentistry coming in nearby and offering cheap products or cheap exams. But consider it a great opportunity! Corporate dental practices usually do standard dentistry—they offer the usual treatments and nothing more complicated than that. You can convert those patients to your practice—I see it happen all the time.
Lastly, threats are external factors that can hinder an organization. Consider these questions:
• How do your weaknesses affect your practice?
• What external factors could hurt your business?
• What obstacles do you need to overcome?
• Is your office in need of updated technology?
As mentioned previously, threats can include corporate dentistry expanding to your neighborhood or the economy declining. Often, however, threats can be opportunities in disguise. Even a bad economy can be seen as an opportunity.
In 2008, when the economy was down and some areas of the country reported as much as 10 percent unemployment, Dr. Jim Downs of Denver, CO, said that the downturn was an opportunity to be positive—it was a temporary situation, and even with 10 percent unemployment, 90 percent of people were still working! Therefore, 90 percent of your patients likely still had jobs.
Other threats may be a lack of qualified people to hire, poor name recognition, and additional competition in your area. Sometimes new technology can be a financial threat—it may seem like you have to invest in technology because everybody wants a one-day crown, for example. But sometimes the threat is an opportunity to evaluate other options.
Don’t Forget About it!
Remember that a SWOT analysis has a limited shelf life, which is what I like about this particular analysis—you can’t do it once and forget about it. Dental practices should conduct a SWOT analysis once or twice a year, to help with setting yearly goals. For example, at the end of 2016, assess how much production you’re going to have as a goal for 2017. At the end of 2017, do another analysis and see how things have transformed! Work as a team to set priorities and decide which items to take action on.
As a result of a SWOT analysis, you will be able to find your niche and the best areas of your practice to focus on and highlight. You will also discover that your team wants to be involved in the success of the practice. This simple exercise will encourage discretionary effort among all your team members.
Additionally, you will have a heightened awareness of what you have as a business, and how you can take that business to the next level. You will also discover what additional services you can offer for your community. If you haven’t done a SWOT analysis for your practice yet, download the worksheet below and get started today!