What is a SWOT analysis?
A SWOT analysis is a framework for identifying the strengths, weaknesses, opportunities, and threats to a business. It helps you see where your business stands today and how it might do in the future. You can perform a SWOT analysis annually to work on necessary improvements or changes throughout the year.
How to do a SWOT analysis
Now that you know the basics of the SWOT analysis, let’s discuss the key steps that are involved in its creation.
1. Create a SWOT diagram
The first step of doing a SWOT analysis is to create a SWOT diagram. To visualize the framework, you can use a 2×2 quadrant and label each box with a relevant heading. Write strengths and weaknesses in the top row and threats and opportunities in the bottom row.
You can make a quadrant diagram by yourself or use a SWOT diagram template which is easily available online. Templates are easy to style and customizable according to your company’s branding.
However, do not feel restricted to a 2×2 grid. While it’s the most popular choice for SWOT diagrams, you can also create a SWOT matrix using a horizontal or vertical diagram.
2. Define your goal
After visualizing the diagram, you should focus on one clear objective. Is it to merge with other businesses? Are you expanding your local business? Once you have a set goal, you can use it to create the SWOT diagram.
3. Loop employees in
Bring the relevant team members together and hold a brainstorming session. Team members in this session can be from finance, marketing, or even customer service representatives. Encourage everyone to be creative in their discussions. For example, members can make a list of the company’s strengths and weaknesses and things they identify as opportunities and threats.
Do not worry about how relevant each idea is at this point. Hear what each participant has got to say, and you might discover something that can positively affect your bottom line.
4. Break down the SWOT components
Once you decide on a goal for your SWOT analysis and get input from your team, you can work on the four components of the SWOT process: strengths, weaknesses, opportunities, and threats. Here are some things that influence the internal and external factors and some ideas to get you moving:
Strengths
Advantages your business has at its disposal are its main strengths. Some advantages include:
- Great location
- Great development team
- Strong brand affinity
Weaknesses
It is very crucial to identify your team’s main weak points. These are areas where you might be struggling and can do better. Things like low revenue, poor online reviews, and budget limitations are some weak points. Make sure to take your staff’s input when highlighting these weaknesses.
Opportunities
After listing down the strengths and weaknesses, it is time to look at opportunities. These are favorable conditions that you can use to your advantage. Few examples include:
- New markets
- Evolution of technology
- Increase in population
Threats
Lastly, you also need a list of threats that might be preventing you from achieving your goals. These conditions are beyond your control and influence your chances of success. Common threats to businesses include:
- Something you don’t have that the competitor has
- Unreliable suppliers
- Taxes and law-related changes
- Economic changes that can impact your business
5. Lay out your strategies
Once you’ve created your SWOT, analyze each of its components to determine what strategies to apply. For example, if millennials hold a positive perception about your business, you should design campaigns tailored to them to improve it further.
You could also use the opportunities available to you to combat potential threats. If you find that adopting a certain technology gives you an edge in your industry, consider investing in toolsets to make it happen. This can help you neutralize the threats posed by your competitors.