SWOT analysis
SWOT analysis

SWOT Analysis for Plan Your Business Strategy

What is a SWOT analysis? S.W.O.T. is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is an organized list of your business’s greatest strengths, weaknesses, opportunities, and threats.

Strengths and weaknesses are internal to the company (think: reputation, patents, location). You can change them over time but not without some work. Opportunities and threats are external (think: suppliers, competitors, prices)—they are out there in the market, happening whether you like it or not. You can’t change them.

Existing businesses can use a SWOT analysis, at any time, to assess a changing environment and respond proactively. In fact, I recommend conducting a strategy review meeting at least once a year that begins with a SWOT analysis.

SWOT Analysis for Planning Process

New businesses should use a SWOT analysis as a part of their planning process. There is no “one size fits all” plan for your business, and thinking about your new business in terms of its unique “SWOTs” will put you on the right track right away, and save you from a lot of headaches later on.

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 company. 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.

SWOT Analysis Category

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.

I recommend holding a brainstorming session to identify the factors in each of the four categories. Alternatively, you could ask team members to individually complete our free SWOT template, and then meet to discuss and compile the results. As you work through each category, don’t be too concerned about elaborating 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 of highest priority at the top to lowest priority at the bottom.

Questions to ask during a SWOT analysis
I’ve compiled some questions below to help you develop each section of your SWOT analysis. There are certainly other questions you could ask; these are just meant to get you started.

Strengths (internal, positive factors)

Strengths describe the positive attributes, tangible and intangible, internal to your organization. In SWOT analysis, they are within your control.

What do you do well?

What internal resources do you have? Think about the following:

Positive attributes of people, such as knowledge, background, education, credentials, network, reputation, or skills.
Tangible assets of the company, such as capital, credit, existing customers or distribution channels, patents, or technology.

What advantages do you have over your competition?

Do you have strong research and development capabilities? Manufacturing facilities?

What other positive aspects, internal to your business, add value or offer you a competitive advantage?

Weaknesses (internal, negative factors)

In SWOT analysis, weaknesses are aspects of your business that detract from the value you offer or place you at a competitive disadvantage. You need to enhance these areas in order to compete with your best competitors.

What factors that are within your control detract from your ability to obtain or maintain a competitive edge?
Then, What areas need improvement to accomplish your objectives or compete with your strongest competitors?
What does your business lack (for example, expertise or access to skills or technology)?
Does your business have limited resources?
Is your business in a poor location?

Opportunities (external, positive factors)

In SWOT analysis, opportunities are external attractive factors that represent reasons your business is likely to prosper.

What opportunities exist in your market or the environment that you can benefit from?
Is the perception of your business positive?
Has there been recent market growth or have there been other changes in the market the create an opportunity?
Is the opportunity ongoing, or is there just a window for it? In other words, how critical is your timing?

Threats (external, negative factors)

In SWOT analysis, threats include external factors beyond your control that could place your strategy, or the business itself, at risk. You have no control over these, but you may benefit by having contingency plans to address them if they should occur.

Who are your existing or potential competitors?
What factors beyond your control could place your business at risk?
Are challenges there created by an unfavorable trend or development that may lead to deteriorating revenues or profits?
What situations might threaten your marketing efforts?
Has there been a significant change in supplier prices or the availability of raw materials?
What about shifts in consumer behavior, the economy, or government regulations that could reduce your sales?
Has a new product or technology been introduced that makes your products, equipment, or services obsolete?

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