Done properly, a SWOT analysis can be one of the most effective strategic planning tools you have. For small businesses, SWOT analyses can be completed in just a short amount of time without the need for outsourcing. Performing a SWOT analysis can help you make important business and marketing decision that will help grow your business. Before we look at how to perform a SWOT analysis, let’s take a look at how performing one can benefit your small business.
How can it benefit your business?
- Identify your strengths. Improving on and using your strengths is where you will spend 70% of your time as a business. A SWOT analysis can help you figure out what those strengths are so you can lean into them and make sure you’re working to improve on them.
- Identify your core competencies. Basically, figure out what you’re good at and what gives you a competitive advantage over the competition.
- Find your flaws. To improve, you have to figure out what your weaknesses are. Determining your flaws allows you to make improvements.
- Brainstorm and plan. Completing a SWOT analysis will help you make business decisions. Once you understand your company’s position, you can come up with ideas to maximize your strengths and improve in your weak areas.
How to complete a SWOT analysis
Think of a SWOT analysis like a matrix divided into four quadrants. There are four categories: strengths, weaknesses, opportunities and threats. Let’s break down each category.
Strengths. This is an internal analysis of your business as a whole. Basically, figuring out what you’re good at. Here are some questions you can answer to help you identify your strengths.
- What are your skills?
- What experience do you have?
- What do you do well?
- What expert/specialized knowledge or talent do you have?
Weaknesses. This is the second internal analysis of your business. This helps you identify what could potentially hurt your progress. Here are questions to answer to help you identify your weaknesses.
- What resources do you lack?
- What parts of your business aren’t very profitable?
- In what areas do you need to improve?
- Where do you need to further your education/experience?
Opportunities. Identifying opportunities involves looking at the external environment in which your business exists. Here are some examples of opportunities.
- A developing market
- A market segment vacated by an unsuccessful competitor
- Mergers, joint ventures, strategic alliances
Threats. Threats are negative external factors. These are things you can’t necessarily control, but could negatively affect your business. Here are some examples of threats.
- A new competitor in your home market
- Price war with competitor
- Taxation on your product or service
- Competitor has new, innovative product or service.
Remember, even if two people conduct a SWOT analysis on the same exact business, they will likely be different. SWOT analyses are subjective. Because of their subjectivity, you should not rely solely on SWOT analysis to help with strategic planning. Incorporating one into your regular strategic planning activities can help you come up with effective strategies to grow your business.