Growing a business requires great awareness of how and where you fit within your industry.
Knowing what makes your business stand out and where it can improve is vital to long term success, and being able to
answer “what is a SWOT analysis?” also opens you up to learning about the important qualities of your business and
market.
In the simplest form, a SWOT analysis is an assessment of a business’ strengths and
weaknesses, as well as the opportunities and threats that are apparent within the market.
While a few may seem to come close, the truth is, no business is perfect. No matter how many
internal strengths your business has, inevitably, it will also have weaknesses. For example, Facebook may have more
users than any other social networking platform, but they also seemingly have widespread dissatisfaction across
their workforce.
Likewise, even a business that has the most opportunities to take advantage of will face
threats that could stunt their progress or even threaten their entire businesses. Although Facebook has managed to
take advantage of the worldwide growth of internet and smartphone access, they also face major threats - like the
inability to keep up with data breaches.
If you’re confused on what a SWOT is or how to create one,
don’t worry, your confusion ends today. In this post, you will learn exactly what a SWOT analysis is, why
it’s key to writing a business
plan, and most importantly, how to put one together.
Internal factors include strengths and weaknesses - factors that can be controlled and that the business has some
ability to change. With the right resources and a commitment to do so, a business can work to gain more strengths
and eliminate weaknesses that are present.The SWOT analysis is typically displayed in a matrix - with internal
factors across the top and external factors across the bottom.
External factors include opportunities and threats - factors existing within the market that
affect your business. While businesses can control how they respond to these opportunities and threats, they can’t
outright control the existence of these factors.
Putting together a SWOT analysis isn’t difficult, but it does require you to perform an
in-depth analysis of your business, market, competitors, and industry.
Take your time when you complete your SWOT. Since your entire business strategy hinges upon
this analysis, rushing through it is as ineffective as not doing one at all. Instead, follow these tips to best
assess the position of your business.
The SWOT Matrix
Internal factors include strengths and weaknesses - factors that can be controlled and that the business has some
ability to change. With the right resources and a commitment to do so, a business can work to gain more strengths
and eliminate weaknesses that are present.The SWOT analysis is typically displayed in a matrix - with internal
factors across the top and external factors across the bottom.
External factors include opportunities and threats - factors existing within the market that
affect your business. While businesses can control how they respond to these opportunities and threats, they can’t
outright control the existence of these factors.
Does Your Business Plan Need a SWOT Analysis?
When you’re creating your business plan, a SWOT is not only necessary - it is the foundation of your entire business plan. Without knowing your strengths, it is impossible to communicate them to your audience. Without knowing your weaknesses, it is impossible to implement the steps necessary to overcome them. Without knowing the market opportunities, it will be impossible to take advantage of them. Without knowing the threats your business may face, it will be impossible to put the right measures in place to avoid them. It is a wise decision to complete a thorough SWOT analysis before developing your business strategy. In most cases, every business plan format contains some type of SWOT audit. A proper SWOT analysis will require extensive research, but without this research, there will be obvious gaps in your business strategy.How To Create Your SWOT Analysis
Putting together a SWOT analysis isn’t difficult, but it does require you to perform an
in-depth analysis of your business, market, competitors, and industry.
Take your time when you complete your SWOT. Since your entire business strategy hinges upon
this analysis, rushing through it is as ineffective as not doing one at all. Instead, follow these tips to best
assess the position of your business.
Internal Analysis - Finding Your Strengths
When it comes to a SWOT analysis, strengths represent your company’s competitive advantage and unique selling points. When analyzing the strengths of your business, think about the things that make you stronger than your competitors, the factors that make your business better able to serve consumers, and the barriers to entry that your business has created.Internal Analysis - Identifying Your Weaknesses
No matter what your business is, weaknesses exist. Many businesses aren’t even aware of their weaknesses - or simply choose not to acknowledge them. However, weaknesses are an internal factor and can be controlled. When you know your weaknesses, you can better prepare yourself to overcome them; potentially even turning your weakness into strengths. Consider the areas where your competitors may have a one-up on you. A brand new business, for example, would likely have extremely low brand awareness when compared to a more established business. The same business may not have a proven marketing strategy in place, whereas, a more established business may already have a strong marketing strategy already integrated. Tinder is a business with many strengths, but like every other business, it is not weakness proof. “Tinder Fatigue” was coined specifically for this app and refers to users who use the app so much that they burn out on it. Instead of being perceived as a special activity, Tinder dating simply becomes another thing to do; with users simply passing the time instead of seeking long-term romance. While the app has gained worldwide recognition, individuals who are looking for love do not consider it as effective as other online/mobile platforms.SWOT External - Taking Advantage of Opportunities
Businesses that are able to identify and take advantages market opportunities are usually able to achieve far greater success. Opportunities are typically out of the business’ control. These are factors that exist that could help your business advance, such as trends in the market or market gaps that competitors are not taking advantage of. Uber, for instance, realized an opportunity that many others didn’t see. While the taxi business had thrived for decades, Uber’s founders realized that in most areas, the taxi concept was inefficient. Furthermore, they found opportunity in the fact that most adults have vehicles, and a large enough share of them want to earn additional income. Without recognizing this opportunity and the changing market landscape - rideshare may still not exist today.SWOT External - Managing Threats
Threats are external factors that can hinder your business from progressing or could even cause your business to shut down completely. Fast food chains, for example, are constantly threatened by the potential for increased federal wage minimums. Since they rely heavily on minimum wage employees, an increase in the federal minimum wage may severely decrease their margins. Your business will face threats, whether it be threats from new competitors, threats from changing laws, or even the threat of not being able to secure the right partners.What is a S.W.O.T? (Example)
To give you a better understanding of how a SWOT analysis works, we’ve provided an example from a previous client that worked with. This particular client had built an online marketplace where people could find a trusted house sitter for durations when they would be on vacation or away. The Company had recently launched a minimal viable product and was seeking to secure capital from an angel investor.
