Doing a SWOT Analysis for Your BusinessGeneral
Regardless of your industry, taking a close and critical look at your business is always a good thing to do. For one, this allows you to identify your essential strengths and weaknesses, as well as evaluate your chances for success and risks you may encounter. Furthermore, gaining a profound insight into the core factors influencing the effectiveness and profitability of your business is necessary for building your further development strategies. This is where a SWOT analysis comes in.
What is a SWOT analysis?
‘SWOT’ is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. These are the basic parameters you will need to assess in order to find out how your business is holding on the market and whether it is capable of surviving the competition.
Pretty much like market research, a SWOT analysis is an exercise that helps you determine in which areas your business is excelling and what makes it lag behind the competition. Not only does it let you see the big picture, but also points you in the right direction as for how you can use your advantages to grow and make more profits while minimizing the weaknesses and mitigating risks.
The knowledge of factors having the direct or indirect effect on your business is vital for strategic planning. Since the “one size fits all” approach is incompatible with the dynamically changing market realia, a SWOT analysis can be viewed as a way to make a “snapshot” of your business under current circumstances and at the certain stage of its development with the ultimate purpose of identifying how it fits in the current business environment.
However, a SWOT analysis is not necessarily applied to a business or a specific brand as a whole. It can be as effectively utilized for evaluating individual projects, marketing campaigns, social media strategies, etc. A product SWOT analysis, for instance, is a great way to assess the viability of a product on the market. Even seemingly minor decisions like creating a new business website can be effectively scrutinized through a SWOT analysis.
Preparing a SWOT template
As mentioned above, a SWOT analysis implies identifying strengths, weaknesses, opportunities, and threats attributed to a company, project, product, etc. The most convenient way of organizing your input data is building a simple table consisting of four quadrants, one for each category of factors. This table is often called a SWOT template, and it usually looks like this:
Identifying internal factors (Strengths & Weaknesses)
Attributes like strengths and weaknesses are considered to be the internal factors influencing the effectiveness of your business because you can actually control them. Let’s say a slow production cycle is your weakness. However, you can improve the situation if you hire more qualified staff or buy better equipment.
Potential strengths and weaknesses may include:
To start the analysis, you need to collect all the information about the company or product. Study the market carefully, pay attention to your target audience and feedback from your customers.
Then, focus on competitors. Compare your company and product with theirs. Determine the internal factors that can potentially affect the level of the company’s competitiveness. In this way, it will be easier for you to define your advantages and disadvantages.
Keep in mind that your SWOT analysis should take into account both current and forecasted trends. This is necessary for a clear understanding of the tasks and challenges you are going to tackle once the analysis is complete. It is important to assess your strengths and weaknesses adequately and objectively. Remember this and do not forget to predict potentially possible situations.
Identifying external factors (Opportunities & Threats)
While strengths and weaknesses are internal factors, opportunities and threats are considered to be external as they originate from the outside environment and are usually beyond your control. For example, another company entering the market and increasing the competition is a negative external factor you cannot change regardless of the situation within your company.
Potential opportunities and threats include but are not limited to:
In order to evaluate the opportunities, it is worth focusing on areas like expanding the sphere of influence, attracting new customers, diversifying the product range, introducing new technologies, optimizing prices, etc. In other words, everything you could possibly improve today and in the foreseen future.
Assessing the potential threats, do not get overly obsessed with the influence of competitors. There are more factors to take into consideration, for example, changes in the lifestyle of your target audience, new legal norms, the decline in the economy as a whole, and even the probability that customers will just give up on your services. However, there’s no need to go over the top: figuring out what disasters await your business in case of armageddon will hardly save you anyway.
Collecting data for a SWOT analysis
It is important to point out that a SWOT analysis, unlike other types of business research, relies mostly on subjective evaluation rather than accurate data. Normally, only insiders who know all ins and outs of the business can most precisely determine its attributes. Not to say that outsiders are incapable of the consistent assessment on the basis of existing knowledge about the brand, its products, and overall impressions, but an entirely valid SWOT analysis accounting for every tiny aspect of a given business can only be carried out by its management and employees.
To mitigate the subjectiveness of your research, try to involve as many points of view as possible. You shouldn’t conduct the analysis all by yourself even if you think you are perfectly aware of all the constants and variables. The best option is to ask several people (or even groups of people) with different perspectives and stakes to fill in a SWOT template. You might even want to survey every department of your company!
Alternatively, you could initiate a brainstorming session to speed things up. Invite representatives from each department (e.g., management, sales, development, customer support, etc.) and work through each category point by point. There’s no need to elaborate much on each factor named as your primary goal is to gather as many valid suggestions as possible.
Once the job is done, compile the data and study it carefully. Your purpose now is to distill the most relevant factors from each category and sort them out by priority. Make a table or a list that will be convenient to analyze further. Compiling and listing the elements within the categories can be carried out in the form of a collective brainstorming session as well.
Analyzing the results
Once the data is gathered and put in order, consider your SWOT analysis almost complete. There’s just one more thing to do: analyze the information and draw the appropriate conclusions. In this regard, the best way to turn the raw data into in-depth insights is finding out how the strengths, weaknesses, opportunities, and threats overlap with each other. This will allow you to see how to use your strengths to create more opportunities and mitigate threats, as well as improve the weaknesses.
Here’s how you match up your attributes:
- Strengths VS. Opportunities. Analyze how each of your strong points can be applied under different possible conditions to create more opportunities for growth and higher profits.
- Weaknesses VS. Opportunities. Identify which of the shortcomings or flaws should be eliminated in order to open up this or that opportunity. Another way to look at this is by asking the question: how to protect the existing opportunities from the weaknesses’ influence?
- Strengths VS. Threats. This one is quite simple. Do you see any specific threats that might harm your business? Consider how your strengths can help you fight them off. In other words, minimize the risks!
- Weaknesses VS. Threats. Of course, nobody likes to acknowledge one’s weaknesses. After all, they can increase the threats from the outside. Your competitors never sleep, while all sorts of unfavorable circumstances may strike any minute! This is why it is vital to figure out how to manage and steadily uproot your weaknesses in order to reduce the threats.
As you can see, a SWOT analysis is not difficult to conduct and doesn’t take too much time. What is more, there are plenty of SWOT analysis examples available all over the internet so you can easily check them out and use as a blueprint. The results of the analysis can be quite eye-opening. In the daily routine, it is very easy to get lost in minor tasks and tiny details of your enterprise, hence, overlooking the big picture.
Ideally, the results of the analysis should translate into a set of goals, a strategy for further development and growth. Nevertheless, there’s no need in complicating it. The key to an effective analysis is brevity and your expert view on the business and market in general.