As part of your business plan, it is really important to spend some time doing a SWOT analysis.
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. A SWOT is really useful for many aspects of analysing your business and should not be a one-off exercise. Do it, reflect up on it, compare to it when analysing your market and your competitors…and re-do it as your business grows and develops.
Before you begin the SWOT analysis, we do recommend that you do some research to understand your business, industry and market, this will make your SWOT a lot more detailed and relevant.
How to do a SWOT analysis
It is very easy to do a SWOT. Draw a large square and divide it in to four smaller boxes. Label the top two boxes ‘Strengths’ and ‘Weaknesses’, respectively, and the lower two ‘Opportunities’ and ‘Threats. As the illustration shows below.
Now start completing the boxes. Your strengths and weaknesses are internal factors, meaning they are personal to you and your business. To help identify them, ask yourself the following questions:
- For strengths:
- What are you good at?
- What specialist expertise do you bring?
- What do you do better than your competitors?
- For weaknesses:
- What are you not good at?
- What are your non-profitable areas?
- Where do you need training or lack experience?
Then consider opportunities and threats. These are external factors – things in your environment that you are not responsible for, but will affect your business either positively or negatively. To help identify them, consider:
- For opportunities:
- What can you exploit in the local area/environment?
- What trends are supporting your business?
- For threats
- What could cause problems for your business?
- What changes to industry standards or guidelines could affect your business?
Why do a SWOT analysis
Each box helps you to understand your business better. Consider the threats you have identified and analyse how you can use your strengths to overcome or limit their effect on your business. Similarly, identify if any opportunities will help to counter your weaknesses. Use your strengths to further exploit the opportunities presented and also consider how threats may expose your weaknesses further.
As an example, if you have identified that a weakness is that you lack a specific area of expertise, say in book keeping, but the local college offers courses (an opportunity) then take advantage of this. Or if you struggle with time management and there are apps available (an opportunity) use them. This is a little simplistic, but hopefully you get the idea.
There are many benefits to doing a SWOT analysis – making you really consider where your business stands and the positives (importantly!), as well as the negatives you perceive you bring to your business.
What’s great is that it is simple to do and very practical to use and reflect upon. It can help you to identify the advantages you have over your competitors, as well as areas to be aware of and can help you to identify future goals and areas to focus upon for either further analysis or research.
Using your SWOT
It is really important that you use your SWOT analysis productively. One way is to establish priorities from the SWOT to help with your goals. Work out what issues are the most important and what can be dealt with later. As part of your business plan, your SWOT is likely to be quite general, however, it is also a useful tool for very specific objectives or areas of your business that you wish to analyse.
Doing a SWOT analysis is a great use of your time, however, as stated at the beginning, we believe it is just one part of your business plan and will only be more detailed and accurate if you have done significant research before (or updated after).
Any questions or keen to learn more? Join us at our next workshop. Email email@example.com for more information.