What is a SWOT?
A SWOT analysis is a great way to evaluate your business. SWOT stands for strengths, weaknesses, opportunities and threats.
Strengths and weaknesses look internally at your business, whereas opportunities and threats are an external review of the competitive environment in which your business operates.
Finding your strengths and weaknesses
To find the strengths within your business, write down any strength that gives you a competitive advantage, or can be used to develop a competitive advantage.
An example of strengths:
- Reputation of both your business and staff in your customers’ eyes.
- Patents or Intellectual Property.
- Accreditation or certifications.
- Exclusive access to knowledge, equipment or process.
- Cost advantage due to internal knowledge.
- Relationships with suppliers e.g. distribution channels.
An example of weaknesses:
- Lack of day-to-day knowledge of your financial position.
- Uncertainty if an experienced staff member leaves.
- Lack of strategies to retain knowledge within the business.
You may even have a weakness relating to one of the strengths. While you may have a good reputation within your customer base (strength), your on-line reputation may be lagging behind (weakness).
Want more articles like this? Check out the business plans section.
Finding your opportunities and threats
To find your opportunities, think about what is happening in your own industry and in related industries. This review of the external business environment may reveal potential opportunities for growth.
An example of opportunities:
- Potential contracts about to be advertised.
- Publicity in an industry magazine or local paper.
- Extra services that are being requested that you could add to your offering.
- A new release, tweak or launch of social media/technology that will help your business, or maybe create a new market for your business.
- A change in regulations.
An example of threats:
- New legislation costing your business more time and money, potentially making it more difficult to compete in the marketplace e.g. health and safety, importing/exporting.
- A new technology making your product/service obsolete or requiring a large amount of rework.
What to do with your SWOT analysis
You can use your analysis to help focus and prioritise your energies for the coming year.
Strengths and Opportunities
Pursue opportunities that best fit with the strengths of your business.
Weaknesses and Opportunities
Work on the weaknesses, that if overcome, would put your business in a good position to take advantage of all your identified opportunities.
Strengths and threats
Work on strengths that can reduce the risk of a pending threat, so that you’re in a good position to minimise the impact to your business.
Weaknesses and threats
Plan how to best deal with weaknesses that plays into the hands of a threat. Also, plan what can be done to address the weaknesses that are making the business more vulnerable.
A SWOT analysis will have you ready to tackle the year ahead and to take advantage of the opportunities that come your way.
What planning methods do you use in your business to stay competitive?