A business SWOT analysis can help you to determine the direction of your business, either at the business plan stage or at a later date.
SWOT analysis needn’t take too much time, but the benefits for business planning can be significant. So here, we’ve explained how a business SWOT analysis can help you, how to conduct one, and how to build on it.
SWOT analysis is a technique by which you can get a better strategic understanding of your business. The acronym stands for Strengths, Weaknesses, Opportunities, and Threats, and a SWOT analysis gives you a better handle on all of these factors and the ways in which they could impact your business.
Businesses that are already up and running might choose to use a SWOT analysis to assess how they are performing, and how they can best react to, for example, changes in trading conditions – an important tool in an uncertain market. However, perhaps the most important beneficiaries of a SWOT analysis are new businesses in the planning stage. This technique can help you to build better business plans, and as a result to give you the best possible chance of success.
All too often, new business owners simply download a business plan template and fill in the gaps. However, this isn’t the most effective way of planning. There is no one answer for every business, but a SWOT analysis can give you a flexible, customisable, and relevant framework through which to analyse your idea and get it off the ground.
So how do you conduct a business SWOT analysis? First, remember that two heads are better than one. If at all possible, have a range of relevant parties involved in the analysis process; they will each be able to bring their own ideas and concerns to the table. Once you’ve got your panel of analysts together, we can start working through the process.
So, what existing resources do you have at your disposal? This might include your own knowledge, any existing intellectual property, business connections, qualifications, and more. You might also have access to things like existing credit lines, or maybe even premises. You should also think about specific aspects of your idea. What makes your product or offering stand out from the crowd?
Here, you need to concentrate on areas of your business that need improvement if you are to succeed in your chosen market. You should think about factors that are within your control. What can you improve internally to make sure that you are competitive? For example, do you need more staff, machinery, or skills?
What external factors make your business attractive? For example, is your chosen market growing? Are there specific opportunities, whether time-limited or ongoing, that you can seize in order to make yourself more competitive or profitable?
Think about things beyond your control that you should be planning to mitigate. For example, what if one of your competitors grow more quickly than anticipated? What if the market starts to shrink? Similarly, what about environmental or consumer factors that might change suddenly and negatively?
As you might have seen, these four categories can be split up. Strengths and Weaknesses refer to factors that are internal to your business, while Opportunities and Threats are external. Similarly, Strengths and Opportunities are positives, while Weaknesses and Threats are negative.
SWOT analysis templates are easy to make. You may find it easiest to brainstorm on paper first, and to then add your thoughts to an Excel document. Split the page into four squares, each of which is dedicated to one of the four letters of the acronym. Then, within each of those four squares, list each of the relevant factors. However, you need more than just the name of the factor: you should also give a quick topline explanation of what it is, and how it affects your business.
Remember, the SWOT analysis is a means to an end, not an end in itself. It’s not enough to just identify these factors: you also need to build strategies around them.
Here, it’s useful to think of a matrix. Line up your Strengths with your Opportunities and Threats, and then do the same for your Weaknesses. So, how will you use your Strengths to maximise your Opportunities, and how will you use them to mitigate the Threats? Then, how will you strategise to make sure that your Weaknesses do not undermine your Opportunities, and how will you ensure that they do not exacerbate the Threats? Finally, make sure that you conduct regular reviews of your SWOT analysis to make sure you’re still on track.
Would a SWOT analysis help your business? Tell us your thoughts below.
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