Where do you want to take your business? How can you get there? What has the potential to stop you? Questions like these are at the root of SWOT analysis, a technique you can use to assess the current position of your business and craft a strategy that can distinguish you from the competition. Want to know more about the purpose of SWOT analysis and how to do a SWOT analysis for yourself? Read on for more.
What is SWOT analysis?
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. These terms can be broken down into the following categories:
Strengths – positive internal factors
Weaknesses – negative internal factors
Opportunities – positive external factors
Threats – negative external factors
So, what is SWOT analysis? Put simply, it’s a strategic planning technique that businesses can use to evaluate their competitive position and develop a long-term strategy for growth. The purpose of SWOT analysis is to provide a realistic, facts-based evaluation of your company’s strengths and weakness, although it’s important to remember that it should be used as a guide, rather than a prescription.
But what does a SWOT analysis look like? Essentially, it’s a matrix split into four squares – one for each of the four main SWOT categories. You can take a look at SWOT templates – such as this selection from Smartsheet – online to get a feel for SWOT before you get started with your own analysis.
Who needs to be involved in a SWOT analysis?
When doing a SWOT analysis, your company leadership needs to have deep involvement with the process, but they shouldn’t do all the work on their own either. SWOT analysis tends to work best when diverse voices within your organization are given the opportunity to provide realistic data points, rather than relying on pre-approved messaging. Select people from all over the business to represent their function area, whether that’s sales, marketing, HR, or so on. Everyone needs to have a voice.
Of course, SWOT shouldn’t be completely internal either. You can get input from customers, vendors, and suppliers, as well as people unconnected to the business whose opinion you trust. Furthermore, businesses can make use of independent SWOT analysts who can give you additional insights into where the company could improve. Input from third-parties is often a great way to hit upon aspects of your business that you may not have considered before, as they’re offering a totally different perspective.
What is the importance of SWOT analysis?
But why is SWOT analysis important? In short, because it helps you understand your business better, giving you an opportunity to address weaknesses, capitalize on strengths, identify threats, and take advantage of opportunities. Using internal and external data, SWOT analysis of a company can help guide your business towards successful, long-term strategic planning. It ensures that you have the very best foundation from which to make decisions about your company’s growth, forcing you to look at your business in a new way.
How do you do a SWOT analysis of a company?
At the most basic level, it’s very easy to do a SWOT analysis of a company. You simply draw up your SWOT matrix and start filling it up with ideas. Here’s a little more information about what to think about when you’re trying to come up with ideas for each of these categories:
Strengths – This is anything that your business does well, whether that’s access to materials or a particularly effective business process. Think about what makes your business ‘tick’. What are the things that your business does better than any of your competitors?
Weaknesses – This is anything that your business could be doing better. It’s important to be totally honest, so think about the inherent features of your business that could be improved. In addition, try to find out what external organizations perceive your company’s weaknesses to be.
Opportunities – This is an opening or chance to make something positive happen. It could be anything external, from changes to government regulations – such as the EU’s new SEPA regulations – to market trends that may favor your company.
Threats – This is anything outside your business that could have a negative effect, from issues with your supply chain to a new competitor in the market. Think about all the obstacles your business faces on a day to day basis, as well as the extent to which your business is exposed. Could minor changes in the market have a significant effect?
Once you’ve completed a SWOT analysis, you’re likely to have a long list of potential actions to take. Try to look for connections between the quadrants. Can you use an existing strength to capitalize on a potential opportunity? It’s also important to prune and rank your ideas, so you can focus on the ones that are likely to have the biggest impact on your company.
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