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An SWOT analysis can be an invaluable asset to any business, from start-ups to established enterprises. It helps define their strategy and gauge ways in which their industry or market may grow.
To achieve comprehensive and objective results, conducting a SWOT analysis with input from different areas of a business such as management, sales and customer service should produce optimal results.
Strengths
Strengths and Weaknesses in a SWOT analysis focus on internal factors within your control; such as your ability to provide quality products or locating your store near a certain demographic of potential customers.
Opportunities and Threats, the final two points in our four-point system, deal with competition and events happening outside your company. They could represent business opportunities which could bring more revenue in, or threats stemming from changes in the operating environment that arise as your company expands or contracts.
An SWOT analysis is an indispensable component of strategic planning that provides you with insight into both your position and competitive environment. Furthermore, it serves as an avenue for creativity when finding ways to expand or compete more efficiently with others in your sector.
An effective SWOT analysis should involve everyone within a company or organization conducting it, including founders and leaders as well as employees and customers. Some innovative businesses even include customers in a SWOT analysis to help identify any unique opportunities or threats they might present.
There are various approaches to conducting a SWOT analysis, but one of the best methods involves providing each person with their own pad of sticky notes and asking them to think independently for 10 minutes. They should then post these ideas on a wall, grouping similar ideas together if applicable. Participants can add any further ideas that arise during this stage if prompted by hearing of someone else’s thoughts evoking new insights.
Once all the information has been compiled, you can compare your strengths, weaknesses, opportunities and threats in order to determine your next steps. This could involve something as straightforward as creating an action plan to utilize your strengths and take advantage of opportunities identified through SWOT analysis; or as complex as creating a coalition with other businesses with similar goals and threats.
Weaknesses
SWOT analysis (or, “Strengths, Weaknesses, Opportunities and Threats“) evaluates a business’ strengths, weaknesses, opportunities and threats in an organized fashion. Commonly presented as a 2×2 matrix, this useful tool helps users easily identify key aspects of projects or companies efficiently. SWOT analysis can be applied across various fields and types of businesses such as not-for-profit organizations, government units and even individuals.
An effective SWOT analysis requires a team of individuals coming together and pooling their knowledge and expertise in an objective way. For the analysis to be successful, it’s crucial that this group includes members with varied experiences so as to fully consider all areas of a company. In addition, designating an experienced facilitator or leader during this meeting may keep everyone on task and give valuable feedback afterward about its outcome.
Step one of a SWOT analysis involves compiling a list of your company’s strengths. This can be accomplished in several ways, though gathering input from all levels of team members is ideal. As a general guideline, it’s better to record strengths rather than weaknesses; for example if our family-run restaurant boasts an ideal location and outstanding seasonal menu this would count as strengths.
On the other hand, if a family-owned business cannot compete with chain restaurants’ purchasing power, that would be seen as a weakness. A small family-run operation might be able to overcome this obstacle by emphasizing developing meaningful customer relationships – something chain restaurants cannot provide.
Once you have identified your business’s strengths and weaknesses, the next step should be identifying its opportunities and threats. While this step may be harder, you should strive to pair each strength with an appealing opportunity while turning weaknesses into strengths – something any small business owner needs to do if they hope to survive and prosper in today’s increasingly competitive marketplace.
Opportunities
An SWOT analysis can be an invaluable way to uncover opportunities to strengthen or expand your business or break into new markets, while simultaneously revealing potential threats that might impede it. Opportunities and threats often manifest themselves through strengths (what’s going well), weaknesses (areas that need improvement), and opportunities (where your company can take advantage of external forces).
No matter the task at hand – from strengthening core competencies to capitalizing on new market conditions – an effective SWOT analysis provides a roadmap for creating or refining your strategy. According to strategic communications consultant and content marketer Linda Pophal, strategies derived from such an assessment can have a great influence over your company’s success.
SWOT analyses may seem difficult to execute, but the very act of writing them will provide ideas for each category. Furthermore, placing lists side-by-side should reveal connections among them and give further insights.
An example would be a restaurant, with its strengths in its location but weaknesses in accommodating a high volume of customers. But they might also have opportunities in their relationships with local farmers that allow them to emphasize using locally sourced ingredients in sales promotions.
Threats, on the other hand, are usually outside factors that could negatively impact your business. While these cannot be controlled directly, it is nonetheless essential to identify them and consider ways of mitigating any negative impact they might have.
Once you’ve completed a SWOT analysis, it’s time to put those ideas into action. Be mindful that each category – strengths, weaknesses, opportunities and threats – of your SWOT analysis should produce its own plan of action that should guide further business planning efforts. Ensure all plans resulting from your analysis are well documented with research conducted prior to taking any subsequent actions or plans into effect.
Threats
An SWOT analysis provides a list of internal and external issues that might impede on your business, with the objective being to develop strategies which capitalize on opportunities while mitigating threats.
At any stage of strategic planning, a SWOT analysis can help. Be it when planning for the launch of a new product or reviewing performance of existing initiatives, this framework can identify risks or roadblocks to success before they become major issues.
Strengths and weaknesses are internal to your business – factors within your control, like team dynamics, physical location and patents/intellectual property ownership. Opportunities and threats, however, represent external forces which might alter how you do business – such as new competitors entering the market, price increases for raw materials or changing consumer shopping trends.
Identification and capitalizing on opportunities are the cornerstones of successful company or organizational expansion. This may mean expanding your product line, adopting new technology, increasing advertising spend or streamlining team processes. A SWOT analysis can help identify which opportunities should be prioritized over others.
As you draft out your thoughts, be sure to include specific statements for each category instead of generalities such as “competitors” or “changes in the retail industry”. This will ensure your analysis is useful and helps identify concrete ways for making positive changes.
Once your SWOT analysis is complete, it’s time to put its findings into action. This may mean creating a to-do list for the next three months or formulating a comprehensive marketing strategy to expand your company’s online presence. No matter what plan is put forth for taking action and following through with it. Set yourself a deadline and stick with it.
SWOT analysis is an effective tool for developing your company’s strategy, and should form part of any regular strategic planning review (quarterly, half-yearly or yearly). But it can easily become overwhelming if too much information is gleaned during this process. Therefore it’s vital to remain focused on your goals and select only those issues relevant to your business (for instance if the SWOT analysis indicates you need additional staff this is an issue which needs to be addressed through formal HR plan).
