Introduction
A SWOT analysis is a strategic planning tool that helps you assess your business, its strengths, and weaknesses about the market opportunities and threats. This process can help you determine how to grow your company by identifying areas you need to focus on.
Your SWOT Analysis should be conducted regularly so that it can be updated when necessary. Here's how to get started:
Identify your Business
Before conducting a SWOT analysis, defining your business is essential.
Now that you have a better understanding of what defines your company, it's time to identify who your target market is. Who do you want to serve in this industry? Consider the following questions:
- What kind of customer does my business service? Is it big or small companies, households, or individuals?
- How does my product/service compare to others within the industry (i.e., price point)?
To sharpen your focus.
To sharpen your focus and prepare for the hard work ahead, you need to start with an analysis of what we call a SWOT. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
Each section of your business will have strengths and weaknesses as well as opportunities and threats that are unique to them.
So let's take a look at each section individually to identify what you need to work on to be successful.
To uncover weaknesses.
To uncover weaknesses, you must first identify what they are. You can do this by considering how your business is affected by other companies or by looking at the market as a whole.
Doing so will determine which areas bring down your company's performance.
These can be poor customer service, poor quality products/services (especially in comparison with competitors), lack of brand recognition, etc.
How Do You Conduct a SWOT Analysis for a Business?
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It's a strategic planning tool that helps you analyze your business's internal and external environment. You can use it to identify opportunities, threats, and weaknesses.
A SWOT analysis is an integral part of strategic planning. For example, let's say you're opening a pizza shop in New York City. Your SWOT analysis may show that you have many strengths:
- The restaurant industry is growing overall (Opportunity)
- The area has high foot traffic (Opportunity)
- The city offers discounted rent on commercial properties (Weakness)
Strengths
Strengths are things your business does well and better than your competitors. They can be positive features, such as a good product or service.
Or they can be things you've done to make life easier for customers, like an automated ordering system.
Threats are the threats—or weaknesses—in the marketplace that can hurt your business.
These could be anything from new technologies to new competitors who undercut you on price by cutting costs in ways you haven't considered yet.
The value proposition is why someone should do business with you instead of another company: whether it's product quality, customer service, or prices offered by other sellers in the marketplace.
Weaknesses
- Weaknesses are internal factors that can be improved. A weakness is a negative factor of your business that you can control.
-This may sound obvious, but it's important to know what you've got before looking at the opportunities and threats in your environment. Weaknesses can be both positive and negative.
- Strengths are generally related to the company's product or service, while weaknesses often relate more to operational issues (for example, poor customer service).
However, some weaknesses might be related to strategic aspects of your business, such as pricing or positioning within the marketplace; these will usually impact how well customers perceive the quality of what you sell.*
Opportunities
Opportunities are external factors that can help your business grow. They're positive or negative, internal or external, and short-term or long-term.
While some opportunities are immediately apparent, others may require research to uncover.
For example: if you live in a small town and want to start a landscaping business—but there isn't much demand for landscaping services in your town—you may need to find other ways of getting clients (such as by advertising online).
Assess Threats
Once you've identified your business's strengths and weaknesses, it's time to determine what might disrupt your success.
- Identify threats that could impact your business. Is there a competitor who has recently entered the market?
Are there any new regulations or laws that might affect your business model? Can you identify other factors that could make it harder for you to achieve growth goals?
- Evaluate the impact of each threat on your SWOT analysis criteria. For example, suppose there are new competitors in the market offering products at competitive prices. In that case, you may need to rethink how much inventory you carry or how much money goes into marketing campaigns.
On the other hand, if a new law requires all businesses within 100 miles of yours to pay more taxes than they have been paying before
—and those extra costs are passed along directly through higher prices
—you'll probably see an increase in sales volume as customers seek out cheaper alternatives from competitors further away from town or online retailers who don't have local store locations yet have raised their prices yet either because no one is buying anything anyway, so why bother changing anything now until customers start buying again later next year after summer vacation sales kick-off?
Plan your next steps
Your next step is to develop a plan for addressing each of the SWOT areas. You must identify your best opportunities, threats, and most significant strengths, weaknesses, and opportunities.
-This will help you determine where to focus your time and resources to grow your business.
Try creating an action plan for each area of the analysis that identifies actions for addressing each area's opportunities or threats. For example:
- Opportunities – Identify what areas are ripe for growth in your industry; create new products or services based on those trends;
find new markets where there is a demand for what you have to offer;
develop more efficient processes that make it easier for customers to do business with you (ease of use).
- Threats – Add an extra layer of security around data storage systems; train staff members on cybersecurity protocol;
install firewalls on all internet-connected computers so they cannot be hacked into easily by cybercriminals looking at stealing customer information such as bank account numbers or passwords, etcetera."
Conclusion
You can conduct a SWOT analysis on your own business or use this information to help plan the strategy for your next project. By identifying the strengths and weaknesses of your company, you will be able to make better decisions about where it needs improvement and what new opportunities might be available for growth.
