Whenever I find small business owners and entrepreneurs struggling to come up with a business strategy, I suggest a SWOT analysis.
Mostly, their initial reaction to my proposed suggestion is one that exhibits sentiments of unfamiliarity with the business tool.
If you are here, reading this blog post, it’s highly likely that you too are interested in knowing what SWOT analysis is or may simply want to improve your understanding of the business tool.
So, without any further ado, let’s get started with the discussion.
What is SWOT Analysis?
SWOT analysis stands for: Strengths, Weaknesses, Opportunities and Threats.
It is a business tool that allows you to comprehensively assess your business’s strengths and weaknesses, while also helping in the identification of the external elements that present themselves as opportunities for your business, and as threats to its growth and existence.
Based on the findings of the SWOT analysis, you can then come up with a business strategy that further augments your strengths, allows you to leverage any opportunities of growth, enables you to work on your weaknesses and eliminate the pending threats.
With the concept behind SWOT analysis explained, I would now like to discuss how you can conduct a SWOT analysis of your business.
How to Conduct a SWOT Analysis for Your Business
The key to conducting a SWOT analysis for your business is asking the right questions to yourself and then answering them in the light of your knowledge. Here is how you need to proceed:
1) Create a Matrix
You will first create a matrix of four quadrants, with each quadrant being labelled Strengths, Weaknesses, Opportunities and Threats respectively. Your matrix should look something like this—although not necessarily as illustrative:
Now each of those quadrants need to be filled. For that you will move to the next step.
2) List Your Strengths
Start your analysis by identifying your strengths—you will have to look internally. Ask questions such as:
- What makes you and your business stand out?
- Which areas of your business are most profitable?
- What unique skills you have that can contribute to your business’s success?
- What is your business good at?
- What are the strengths of your employees?
Make sure you answer these questions clearly and profoundly, and list your answers in the “Strengths” quadrant of the above drawn matrix.
3) Identify Your Weaknesses
When identifying your weaknesses, it’s important to focus on those that are limiting your business’s growth. Ask the following questions:
- Do you lack resources? If so, what type of resources do you lack?
- Which areas of your business are most resource consuming?
- Which areas of your business are least profitable or not profitable at all?
- Do you lack in experience or knowledge in any particular aspect of your business?
- What problems do you face internally on day to day basis?
Fill in your answers in the “Weakness” quadrant of the SWOT matrix.
4) Highlight Opportunities
When highlighting business opportunities, you must think about all the externally regulated elements that can be beneficial for your business. Ask yourself:
- What makes your customers happy and satisfied?
- Are there any market policies that you can capitalize on?
- Are there new target audiences to reach out?
- Have there been any new technological developments that can benefit your business?
- Is any of your competitor weakening?
Once you have marked out business opportunities to leverage, you can now move to the final step of the process.
5) Recognize Threats
You should always keep an eye out on external elements that pose threat to your business. This would allow you to proactively address any concerns. Here is what you need to ask yourself in order to recognize the threats:
- What are the primary strengths of your biggest competitors?
- What makes your competitors stand out?
- What is the current political and economic situation, and how you see it panning out in the near future?
- What are the recent initiatives taken by your competitor?
Fill in your observations and findings in the “Threats” quadrant of the matrix.
Congratulations, you have learnt how to successfully conduct a SWOT analysis for your business.
And with that, we also come to the end of our discussion. I hope you found the served information useful.
Looking for more such business management and strategy formation tips?
My blog resources can help you. I have experience of more than 25 years in business consultancy and development, having worked with some of the top business organizations around the world. Whatever I have learnt, I try to word into informational blog for entrepreneurs and business professionals like you.
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