How to perform a SWOT analysis for your business?
Planning is important for all businesses, big and small. Planning can be strategic, marketing, or operational-it starts with an understanding of where you are today and confronting the ‘brutal’ facts. This is important if you want to build a future for your company.
What is a SWOT Analysis?
Even if you have worked in a small business, you would have come across the term ‘SWOT Analysis’. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT Analysis is a great way to capture and frame up what your current state is, and is an important tool to evaluate the company’s performance. It has gained tremendous popularity among business owners and top managers.
Strengths and weaknesses are internal factors that exist within each company. We should build on our strengths, shore up our weaknesses, invest in opportunities, and monitor our threats. Many business leaders use the SWOT tool when planning to determine external and internal factors that are influencing their company’s current state of affairs.
The internal factors can be your executives, intellectual property, and customers. Among external factors, we can count on the cost of raw materials, trends, market, and competitors. SWOT analysis can be done both at an organisation level and individual project levels.
Why should you do a SWOT analysis?
Performing a SWOT analysis can help you decide where to focus your goal. It is a great business tool because it provides a systematic way of identifying external and internal factors that can impact your company. It will also help you to achieve your goal.
How to do the SWOT analysis for your company?
Conducting a swot analysis is a powerful way to evaluate your internal processes and examine the viability of a project. One good example might be how well an online advertising campaign is doing. In this article, we will show you how to conduct a SWOT analysis for your business. Let’s jump in!
1. Decide who will conduct the SWOT analysis
The leader of a company generally carries out a successful SWOT analysis. However, it is difficult for one person to carry out the entire exercise. So, heads from each department are also asked to participate, and all the various viewpoints are heard.
2. Decide on the objective
You should have a goal or objective in mind. It could be the introduction of a new product or service or a change in any existing processes.
3. Use a Matrix
You can go into a room with a whiteboard and brainstorm with your planning team, and make your SWOT analysis. Use a list or matrix with bullet points to make it forceful and stimulate further discussion. A SWOT analysis matrix looks like a square with four quadrants. Each of the quadrants represents one element of the Swot analysis-Strength, Weakness, Opportunity, and Threat.
4. Data Analysis
Taking it to the next level is to bring data into your SWOT analysis. Any organisation has lots of data and you should use them to get a clear view of your business. For internal data get perspectives from executives, partners, and vendors.
- The feedback from employees is very crucial; you can have one-on-one interviews with them. It will help you to understand what is working, and what is not.
- You cannot have a great SWOT analysis without understanding your customers. Talking to them will help you to know what you are doing well, and whatnot.
- Learn about the external trends, like demographics and current market information that might affect your industry. Check out your industry association for reports on potential opportunities and threats in your area. Your market can be of two types - one is the market that you serve or your geographic market, and the second is your target market.
- Understand what your top competitors are doing. It is very important to have a holistic view of these external factors.
- And, last but certainly not the least, pull in some of your key performance indicators over the last few years
5. Find out your company’s strengths
- A high-quality product or service that separates you from your competitors and gives you an advantage.
- Tangible assets such as capital, proprietary technology, and human talent.
- A large market share.
- Strong financial position and effective management are also strengths that can help your company prosper.
6. Analyse your Weaknesses
- Things in which you are weaker than your competitors.
- Factors that put your business at a disadvantage to others. It could be the lack of new clients or products or an absence of intellectual property.
- Logistic issues like a long distance to your target market.
- Resource limitations.
Try to turn your weaknesses into your operational goals or people initiatives.
7. Start with Opportunities
Think about the potential opportunities for your business. Opportunities are your growth goals, and you should plan on how to take advantage of them. For example, you can introduce a new product, in keeping with consumer trends.
Do not confuse weaknesses and opportunities
This is a very common mistake that can affect your SWOT analysis. Let us take an example. One thing that might come out of your exercise is a lack of communication with clients. Improving communications sounds like an opportunity, right? But, it’s not, because our external perspective is things we can influence, but we can’t control. Communication is something that we can control, and it is a weakness.
Another thing that you can do is rename the ‘Weakness’ quadrant as ‘Areas of Improvement’.
8. Checkmate the Threats!
You have to first watch out for them, then take some initiative to neutralise them. External factors that could be a potential threat to your business are rising interest rates, or increased competition.
9. Use your SWOT!
The last tip-whatever you do, do not go through the exercise of putting your SWOT together, and then not use it.
SWOT Analysis for Business Ideas
Are you wondering whether your new business idea will be successful or not? Relax, just do a SWOT analysis! It will tell you whether your idea is practical and worth following, or you should chuck it into the dustbin.
70 to 80 percent of new businesses fail in the first year. So, having a feasible business idea is very important for your future. The SWOT analysis will help you to determine the sustainability of your business idea and give it a solid foundation.
SWOT Analysis for Exit Planning
According to a survey by the Exit Planning Institute, more than 60 percent of all businesses will be sold in the coming year. The huge number of exits would make selling a business a great challenge for the founders. Those who do have exit planning, have a better chance of making a sale.
The first step towards successful exit planning for your business would be to make a SWOT analysis. While you are trying to sell your business, the natural thing for you will be to identify its strengths. You can ask a few questions like whether your sales are good, or decreasing year over year.
Great planning starts with first understanding your current situation. Over the years, SWOT analysis has been conventionally used to analyse and interpret the strengths, weaknesses, opportunities, and threats to an organisation. We hope that after reading this article, you have an idea of what SWOT analysis is, and how to apply it to a new business idea. All business leaders would benefit from this tool.
Also Read:
1) How to Start a Café in Pune?
2) How to Start a Cloud Kitchen? A Step-by-Step Guide
3) How to Start Up a Mini-Grocery Store in a Village?
4) How to Start a Wholesale Business?
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FAQs
Q. What are the common weaknesses identified during SWOT analysis?
Ans. The common weaknesses often include quality, productivity, efficiency, and leadership.
Q. Some strengths are intangible. Can you name them?
Ans. One strength that cannot be easily defined can be your company’s brand attributes.
Q. Can you name one external factor that can provide an opportunity for growth?
Ans. Favourable demographic trends can help to expand your business.
Q. What questions should you ask while brainstorming for SWOT analysis?
Ans. Some good topics to raise can be the price of your products and services, the things that your company does best, and customer feedback.
Q. What is a competitive advantage?
Ans. These are the things that you can offer your customers, but your competitors can’t.