What is the SWOT Analysis?
The SWOT analysis (or SWOT matrix) is one of the most well-known tools in any sector of business. This framework can be useful for any type of business or project, be it a product launch, new venture, or analyzing an existing product line. The SWOT analysis is a cornerstone of any business plan, and will show external stakeholders that you are well organized and approaching business with all possibilities in mind.
This framework helps identify Strengths, Weaknesses, Opportunities, and Threats that are affecting or can affect your business or project. These elements are sorted into four quadrants based on if the force is external or internal as well as if the force is helping or hurting your business (see Figure 1).
Figure 1: SWOT Analysis Framework
When performing a SWOT analysis, you’ll want to identify the existing Strengths of your business. Strengths are categorized as internal forces that help your business and give you an advantage over the competition. Some examples of Strengths include:
You’re located in the heart of downtown and get lots of natural exposure to customers.
You’re the only brand selling your type of product in the city, giving you 100% market share for the time being.
You have an excellent team that works together to achieve amazing results with minimal management.
Some things to ask yourself when thinking about what your Strengths are:
What successful processes do you use?
What assets do your staff bring to the table?
What competitive advantages do you have over your competitors?
What assets do you have (customer base, equipment, technology, money, patents)?
Weaknesses are the internal factors of your company that may be hindering your progress or detracting from your Strengths. When thinking about what Weaknesses your business may have, try to be honest with yourself or assemble a team of people to get rid of potential biases. Some potential Weaknesses include:
Are there things that your business needs to become more competitive?
Which of your processes need improvement?
Are there tangible assets that your business needs such as equipment or patents?
Are there any gaps in your talent pool?
Could you perform better in a different location?
Opportunities are the external factors that can be used to help your business succeed. Opportunities can be big or small, with differing levels of difficulty to access. Some questions to ask when thinking about potential Opportunities include:
If your business has been running for some time, do you have a good reputation that you could leverage?
Are there upcoming events that you could participate in to promote your business?
Is your target market growing?
Are there potential regulatory changes that could help your operations?
Threats are external factors that can harm the success of your business or otherwise detract from potential opportunities. Once identified, it can be very beneficial to proactively implement contingency plans just in case a threat does end up coming to fruition. Some things to think about when identifying threats are:
Are there potential competitors that could detract from your market share?
Is your consumer base potentially losing interest in your offering due to changing trends?
Can your suppliers maintain their prices for the foreseeable future?
Are there new market trends that could take business away?
Could technological changes drastically change your operations?
How do I use this Framework?
Once you’ve completed the SWOT Analysis and identified elements in each category of the matrix, you can move onto the next stage of strategic planning - building strategies based on the listed elements and related goals.
The first step is to figure out which of your Strengths can be used to take advantage of existing Opportunities. Are there things currently in your possession that you can use to take advantage of new opportunities? Such as leveraging a good reputation into a growing market?
Next, look at how your Strengths can be used to combat any Threats that are already starting to come into play. You don’t need to combat Threats that are still only concepts, just keep a close eye out for those ones and have a plan if they do start to become real.
Now, try to turn the ideas into actionable steps that you can put onto a calendar for your team as milestones. What do you want to accomplish in the next month, or quarter, or even year?
Lastly, you should think about your Weaknesses. Are there any Opportunities that you can use to negate internal Weaknesses? Or are your Weaknesses amplifying your potential Threats? You can use these ideas to make another list of goals for your team based on what you come up with.
After completing the SWOT Analysis framework, you’ll have a list of forces acting in favour of or against your business, as well as a list of goals to work on. This puts you well on your way to developing a full strategic plan for your business! Keep in mind that all the forces in a SWOT Analysis can change with time, so it is best practice to revise your SWOT every once in a while.
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