To have a successful business, you need to be a smart competitor. How do you create a winning strategy that takes into account your competition? With SWOT analysis. SWOT is a simple tool that can be used whether you’re in the early days of your startup or if your business is already up and running.
What Does SWOT Stand For?
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
Strengths and weaknesses are the internal factors of your business. You have the most control in these two areas. If something isn’t working internally, look at your business’s strengths and weaknesses to correct them. Some examples include your team members, patents, location, marketing, and products.
Opportunities and threats are external factors. They’re parts of the larger market that you have less ability to change. The goal is to use opportunities presented in the market to improve your business and protect it against threats. Examples include competitors, pricing of raw material, and customer shopping trends.
Most SWOT analysis models used by businesses are visualized as a two-by-two grid and organized in list form. Each box lists the top strengths, weaknesses, opportunities, and threats.
SWOT Analysis Layout and Examples
What is a SWOT Analysis Used For?
Preparing a SWOT analysis may seem like something you don’t have time for while running your business. However, taking a step back to analyze these factors can quickly lead to new and thoughtful business strategies. The preparation of a SWOT analysis helps you look at processes from a different angle.
If possible, utilize the assistance of others to help you with a SWOT analysis in addition to your team members. As a founder or owner, you may have a biased approach. People who are not closely affiliated with your business could offer the perspective you need.
How to Do a SWOT Analysis
Gather the right people: Having people from different parts at your company would create the best team for a SWOT analysis. One department may be able to better analyze an aspect of the SWOT analysis than another, so make sure that each team is represented.
Brainstorm: Let everyone come up with ideas quietly before throwing ideas out all at once. After brainstorming individually, compile and group together similar ideas.
Rank the ideas: Once the ideas are organized, rank them through discussion. There should be someone of authority available for this step of the process to make the final call for each of the SWOT ideas.
Questions to Help Guide the SWOT Analysis
These questions can help guide the SWOT analysis:
Strengths are internal, positive attributes of your business.
What business processes are currently successful?
What assets do you have within your team?
What assets do you have that provide value and strength to the business?
Do you have competitive advantages?
Weaknesses are the internal and negative factors that detract from your strengths.
Are there things that your business needs to be competitive?
What processes are currently in place that need to be improved upon?
What tangible assets does your business need?
Are there gaps within your team?
Is the location of the business ideal for success?
Opportunities are the external factors that contribute to business success.
Is the market growing, and are the trends encouraging people to buy more of what you are selling?
Are there any events in the future that the business can take advantage of for growth?
Are there any upcoming changes to regulations that might positively impact business?
What do customers think of your business?
Threats are external factors that you have no control over.
Are there potential competitors that may enter your market?
Will suppliers always be able to supply the materials you need for the products or services you offer?
Could technology in the future change how you do business?
Could changes in consumer behavior impact you negatively in the future?
Are future marketing trends a potential threat?
Create Business Strategies and Goals
Once the analysis is complete and the ideas have been placed in the respective quadrants of the grid, it’s time to put the plan into action as a strategy.
Begin by looking at the strengths and figure out how you can use them to maximize on opportunities. Also look at the strengths and see how you can use them to combat your threats. Finally, use the external opportunities to develop ways to combat your internal weaknesses. Use these to create a list of goals or strategies you can take on as a business in the next quarter.
When you use a SWOT analysis to create operational strategies, you become a smarter competitor. One of the best ways to gain an advantage over your competition is to develop strategies deeply based upon it. Staying on top of your competitors and frequently reflecting on your business helps assure stability.
Improve Processes with Hatch Business Checking
Hatch Business Checking creates more opportunities for your small business. We eliminate NSF fees, offer cashback rewards on eligible debit card purchases, and offer small business perks to help you grow. To find out more, click here.
Subscribe to our newsletter
Get regular content and resources for growing your small business!
Hatch is not a bank. Banking services are provided by LendingClub Bank, National Association, Member FDIC. The Hatch Mastercard Debit Card is issued by LendingClub Bank, National Association, Member FDIC.