What is a SWOT Analysis?
A SWOT analysis is a framework companies use to analyze the health of their businesses. It is a way to assess what is going well and plan for the future.
The acronym stands for:
- Strengths
- Weaknesses
- Opportunities
- Threats
The framework helps businesses get an overview of their performance in the current market and can help to analyze what competitors are doing better.
When do you use a SWOT analysis?
Typically used during strategic planning stages, a SWOT analysis can help you make decisions, develop new ideas and understand future opportunities in the market.
Conducting a SWOT analysis allows you to consider internal and external influences that could affect your business.
If you recognize your strengths and weaknesses as a business, you can build on the things going right and improve. Analyzing the data on the current state of your business can help drive you forward, identify new niches and minimize potential problems.
Identifying potential problems by completing a SWOT analysis can help you think of strategies to make them more manageable.
A SWOT analysis can help you with your overall business strategy or specific goals. For example, a new product launch or your sales and marketing strategy. It can help you get your priorities in line and decide where to shift your focus.
How to conduct a SWOT analysis
When breaking down the four key components of the analysis, here are some things to consider:
Strengths
Consider what makes you stand out from your competitors, why your customers love you, and how effectively you solve their problems.
- What are you currently doing well? Do you have strong brand loyalty, excellent customer success, or a catalog of great reviews?
- What makes you stand out from your competitors? Do you have a USP?
- Is your product used in the way you intended?
- Do you have minimal user complaints and a low churn rate?
- What resources can you rely on to drive your business forward?
- Why do customers choose you?
Weaknesses
What are you doing which could be better? How could you make your processes more efficient and customer friendly? To get honest feedback for your analysis, speak to your customers. They will be able to give real-life ideas for product and user experience improvements.
- What feedback did you receive from customers that could help you improve?
- What do competitors do that you don’t?
- How does your potential audience view you, and what makes them not want to buy from you?
- Why do you sometimes lose out on sales?
Opportunities
By looking at current trends in the market, you can identify opportunities for improvement and growth. Thinking about future trends and your industry’s direction can help you avoid missed opportunities.
- How can you build on your strengths to offer your customers better service?
- What can you do to enhance your competitiveness?
- What trends could have an impact on the way you do business?
- Are there any marketing trends or lifestyle movements you could take advantage of?
Threats
Awareness of the things that may adversely affect your business can help you mitigate problems. When you conduct your SWOT analysis, thinking about potential threats is crucial to building a future-proof strategy.
- Are there any potential supply chain problems that could affect you?
- What is your current cash flow situation?
- Are there any laws or issues in the political climate that could adversely affect your business?
- What are your competitors doing that could take business away from you?
- Are there technological changes that could affect the functionality of your product?
Related: Watch Barbara Stewart’s workshop about strategic business decisions: SWOT to TOWS
Using your SWOT analysis
When making your list within the SWOT matrix, keeping your points concise can help with practical analysis. If the lists are too vague and long, it can lead to overwhelm. You want clear and straightforward answers which can lead to data-backed decisions.
The more precise you are with the points in your analysis, the easier it will be to take action. You can also cross-check the different sections of the analysis; for example, your strengths may help you create new opportunities. Your weaknesses may lead to threats.
Regularly completing a SWOT as part of your business planning can help you keep an overview of your company’s direction and assign resources accordingly.
