What is a SWOT Analysis?
A SWOT analysis is a process used to identify the strengths and weaknesses of your business, as well as the opportunities open to it and the threats it faces. By examining these internal and external factors, you can create strategies that make the most of your advantages, address challenges and help you carve out a niche in your market.
A SWOT analysis can be used to look at a business as a whole or specific projects before they’re launched. It can even be used to evaluate individuals. You’ll often find the analysis broken into a SWOT matrix with each of the categories (strengths, weaknesses, opportunities and threats) occupying a cell on a table.
SWOT analysis example
You can visualise your analysis through a SWOT matrix as above. This helps you see which areas need the most attention and which are looking strong already.
For each section, you’ll ask yourself a series of questions about your business or project. This gives you a picture of where you are in relation to competitors in your industry, and the answers can help form the basis of a new strategy to maximise profits, boost sales and define your unique selling proposition (USP).
We’ve created this walkthrough of each section in your SWOT analysis. On your first draft, write down as many points as you can think of — these can be narrowed down later.
Strengths in a SWOT analysis refer to the attributes of your business that could help you achieve your objectives and vision. These could include your expertise, location, employees or marketing efforts.
When you’re considering strengths, think about them both from an internal perspective, the perspective of your customers and in relation to your competitors.
Here are some questions to ask when analysing strengths:
What do you do well or better than anyone else?
Consider the successes you’ve already had and the areas where you know you have an advantage.
What internal resources do you have?
These can be both physical and not so, from workshop equipment to employee loyalty.
What do you own that separates you from the competition?
Think about your pricing structure or other unique advantages that give you the edge, such as a recipe, process or patent.
What other positive aspects add value or provide a competitive advantage?
Perhaps you’re situated in a high footfall location or you have a well connected business partner who always gets the best rates from suppliers.
What do people in your market see as your strengths?
What do customers or competitors think sets your business apart? Look at your reviews and social media interactions to see what’s actually being said.
What factors help you close deals, hire the best staff, grow your customer base and so on?
Look specifically at strengths that yield positive, identifiable outcomes.
Weaknesses in a SWOT analysis refer to internal factors that might hinder your business’s growth or progress, such as high staff turnover, escalating start up costs or a weak marketing plan. Again, weaknesses should be looked at from every angle – internal, customers and competitors.
Here are some questions to ask when analysing weaknesses:
What factors (within your control) limit your ability to gain a competitive edge?
Look at your team, processes and business plans to identify areas where you need help or improvement.
What areas need improvement to accomplish your goals or compete with your strongest competitor?
Consider where you may lack expertise, skills or (access to) resources and whether you’re missing a core element necessary for success, such as high-speed internet.
What should you avoid?
Identify potential future pitfalls that need to be avoided.
What makes you lose sales?
Take a critical look at why you may have lost sales in the past. Were you understaffed or poorly stocked? Is your business in a bad location?
Do you have bad debt or cash flow problems?
Poor cash flow is one of the biggest weaknesses small business face as they try to get off the ground. Maybe your accounting processes are badly managed or your payment technology needs to be updated with a new integrated point-of-sale system for example.
What might your customers or competitors see as a weakness?
Be frank with yourself and consider if these are perceived weaknesses or real operational issues.
Opportunities in a SWOT analysis are external factors that can provide an opportunity for your business and get you closer to your objective. One way to do this is to look at your internal strengths and weaknesses for ideas.
Here are some questions to ask when analysing opportunities:
Are there any opportunities in your market that competitors aren’t taking advantage of?
Have you perhaps identified upcoming trends or market demands that your competitors don’t seem to have made the means for?
Are these opportunities ongoing or is there a time window?
How fast do you need to act on these opportunities? New trends should be jumped on as soon as possible before they become passé.
Have there been any recent changes in the market?
These could be changes to the law that benefit you as an employer, infrastructural improvements, new influxes of business or demographic changes that could attract new customers.
How do people perceive your brand compared to competitors?
Explore how your competitors are perceived alongside your own brand. There might be some gaping holes in their approach that you can easily fill.
Are there new technologies you can take advantage of?
As your customers become more tech-savvy and demand sleeker digital experiences, what systems and technologies are there for you to bring affordably into your business? This could be the provision of in-store WiFi or the ability to accept mobile payments.
Threats in the SWOT analysis are external issues that could jeopardise your business.
Here are some questions to ask when analysing threats:
What obstacles do you face?
Whether it’s a budget-related threat or a change in industry trends, think about the potential problems your company is facing.
How are your competitors responding to the same threats?
Do a competitor analysis to find out how your rivals are coping with or directly tackling similar threats.
Are quality standards or specifications for your job, products or services changing?
Keep on top of laws, industry trends and news to find out what’s happening in your sector and how this could negatively affect your business.
Is changing technology threatening your position in the market?
Are you struggling to keep up with technological demands? For example, are you finding that more customers want to pay by card but you only accept cash?
Could any of your weaknesses seriously threaten your business?
Think seriously about any factors that are putting the core of your business under jeopardy.
Which threats can easily be turned into opportunities?
There may be threats that you’re already working to lessen. Some may even turn out to benefit your business if you get creative.
Developing strategies from your SWOT Analysis
Now that you’ve completed your SWOT analysis and analysed the results, how can you develop strategies to take your business forward?
First, take a look at the SWOT matrix you created and pick out key bullet points for each section. There may be some crossover, so delete any redundant points and highlight the remaining ideas.
Bullet points can also be combined across sections to act as solutions or ‘cancel’ each other out in a process called the TOWS strategy (threats, opportunities, weaknesses and strengths). This will help you turn your points into actionable strategies. For instance, considering your strengths can help you eliminate threats and take advantage of opportunities. Opportunities in turn can help to deal with weaknesses, which then help you minimise threats. After combining your bullet points in this way, it’s time to prioritise them in order of importance so you can start to form the basis of your new strategy.
The SWOT analysis is well-known for good reason. Especially for a small business getting to know its market, audience and competitors and carve out a stable niche, it creates a system where you can see everything from all angles. It’s a simple process that can have huge benefits, both short- and long-term.
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