How to do a SWOT analysis to improve your business

Ask, identify, implement

If you’ve been in business for a while or if you follow the corporate world, you’ve probably come across the term SWOT analysis. SWOT analysis is a technique that you can use to examine and evaluate your business or your company and get a better understanding of your position in the industry. Not sure of how to do a SWOT analysis? We can help you out.

This indicates a strong positive outlook among small business owners regarding the potential for expansion and success in the near future.

swot-business-company-strategy-marketing-concept

In this article we will answer a few important questions:

  1. What is SWOT analysis?
  2. SWOT Analysis Examples and Templates
  3. Why perform SWOT analysis?
  4. How to do SWOT analysis?
  5. What are the 4 SWOT strategies?
  6. What comes after SWOT analysis

Let’s jump right into it, shall we:

(1) What is a SWOT analysis and examples?

Before we dive into how to conduct a SWOT analysis for small businesses, let’s go over what a SWOT analysis is.

SWOT is an acronym that involves identifying your company’s Strengths, Weaknesses, Opportunities, and Threats. Here’s what each of those elements means.

(A) Strengths

The S in SWOT stands for strength. Identifying your strengths involves understanding the things your company does exceptionally well.

This can include having a memorable and relatable brand, offering a particular service or product, providing fast customer service, or simply having a talented team.

Strengths are internal factors that you have a total control over

Related: A beginner’s guide to branding your business

(B) Weaknesses

The company’s Weaknesses are areas of your business that need to be improved. This can include changing the organizational structure of your company, not having enough skilled employees, dealing with a limited budget, not standing out from the competition, or lack of a clear marketing strategy.

Weaknesses are internal factors that you have total control over

 

Among the myriad challenges businesses encounter, a prevalent weakness is the lack of robust digital skills and marketing acumen. This gap is highlighted by GoDaddy’s Small Business Survey

This reflects the growing recognition of the importance of digital competencies and online marketing in the current business landscape.

(C) Opportunities

Opportunities are simply possibilities for your company to grow and scale caused by the external environment. This can include existing customers asking for a certain product and service that you don’t yet provide, a competitor of yours closing down leading to unserved customers in the market and the potential for a bigger market share that you can acquire, or simply, the consumer income increases in the market you operate in.

Opportunities are external factors that you do not have control over

What are 4 examples of opportunities?

Four examples include:

  1. Emerging Markets: Entering new markets presents opportunities for growth and expansion, especially for businesses looking to diversify their customer base.
  2. Technological Trends: Leveraging new technologies can lead to innovation, improved efficiency, and the development of new product lines.
  3. Partnerships: Strategic alliances or partnerships can provide access to new customer segments, technologies, and enhance market presence.
  4. Social Changes: Shifts in consumer behavior or demographics can open up new markets or create demand for new products and services.

Utilizing a free SWOT analysis template can help organizations, including nonprofits, systematically evaluate these opportunities and integrate them into their business strategy.

(D) Threats

Lastly, threats encompass everything that poses a risk to your company itself or the likelihood of growth from the external environment. This can include new competitors with cheaper products or services, changes in the economy or laws that affect your business.

Threats are external factors that you do not have control over

With that in mind, it’s worth mentioning that you can perform a SWOT analysis for your business as a whole, a single department, or even a single project within a department in your company.

What are 4 examples of threats in SWOT analysis?

SWOT analysis helps businesses strategize by examining internal and external factors. Threats are external environmental elements that could jeopardize a company’s performance. Four examples of threats include:

  1. Market Competition: Increased competition can erode market share and pressure pricing strategies, impacting a company’s profitability and position.
  2. Regulatory Changes: New regulations or changes in existing laws can impose additional costs, limit business operations, and affect long-term business strategy.
  3. Technological Advancements: Rapid technological change can render a company’s products or services obsolete, especially if competitors adopt new technologies more quickly.
  4. Economic Downturns: Recessions or financial crises can lead to a contraction in spending, affecting sales and forcing difficult business decisions.

These threats require careful analysis and proactive project management to mitigate risks and ensure that the planning process for business decisions is robust and adaptive.

Related: 6 ways to start your yearly business planning.

(2) SWOT Analysis Examples and Templates:

Effective strategic planning often involves using a SWOT analysis to gain insights into a business’s operational framework. This method, pioneered by Albert Humphrey, involves brainstorming to fill out a SWOT matrix, which helps in decision-making and forming an action plan. A SWOT analysis template serves as a guide, dividing the page into quadrants, each representing strengths, weaknesses, opportunities, and threats. By utilizing such templates, team members can systematically approach the analysis, ensuring that all aspects of the business environment are considered. This includes examining internal strengths and weaknesses such as human resources, supply chain, and product line, as well as external opportunities and threats like new markets, demographics, and competitive positioning.

Below is a template of how a SWOT analysis table looks like:

 

Strengths

  1. __________
  2. __________
  3. __________

Weaknesses

  1. __________
  2. __________
  3. __________

Opportunities

  1. __________
  2. __________
  3. __________

Threats

  1. __________
  2. __________
  3. __________

The template aids in identifying the organization’s strengths to maintain competitive advantage, weaknesses to address, opportunities for growth through new products or technology, and external threats that could impact market trends. Startups to established companies can benefit from this planning tool, which can be tailored to include a personal SWOT analysis for individual stakeholders or a broader competitor analysis for the entire customer base.

Apple’s SWOT Analysis Example:

Apple Inc.’s SWOT analysis reveals a robust strategic position. Its internal strengths include a loyal customer base, innovative product line, and strong supply chain, allowing for a significant competitive advantage in the tech industry. Weaknesses, though few, point to a high product price range and reliance on a few key products. Opportunities for Apple lie in exploring new technology and market trends, such as the development of artificial intelligence and expansion into emerging markets. However, threats exist in the form of intense competition and market saturation. This SWOT framework helps Apple in its strategic planning and initiatives, maintaining its market position while exploring new product avenues.

 

Strengths

  1. Strong brand recognition and loyalty
  2. Comprehensive ecosystem of products and services
  3. High profit margins and significant cash reserves

Weaknesses

  1. High product prices leading to limited market share in price-sensitive markets
  2. Dependence on a few key products like the iPhone
  3. Perceived lack of innovation in recent years

Opportunities

  1. Expansion into emerging markets such as India and Africa
  2. Development of new product lines (e.g., Apple Car, VR/AR products)
  3. Growth of services like Apple TV+, Apple Arcade, and iCloud

Threats

  1. Intensifying competition from other smartphone and technology companies
  2. Regulatory challenges and antitrust scrutiny
  3. Supply chain disruptions due to global events

(3) Why is a SWOT analysis important?

There are several important reasons why a business should use SWOT analysis:

  • It allows you to define your business and projects better to better serve your customers and increase your profits.
  • A SWOT analysis can help you position your business favorably between you and your competition.
  • It makes it easier to come up with a strategic marketing plan and direction, especially in times of economic crisis.
  • You can use it to improve smaller areas of your business, be that a department in your company or a specific product, project, or service.

Related: 11 steps to create a marketing plan for your business.

(4) How to do a SWOT analysis for your small business

Business Meeting Depicting SWOT Analysis For Small Business

Now that we’ve covered what SWOT analysis is and why it matters, let’s go over the steps for performing a SWOT analysis on your business. One of the best ways to perform a SWOT analysis is to ask a series of questions.

For example, to determine what your company’s strengths are, you could ask the following questions:

  • What do your past and current customers or clients love about your offers?
  • How are you better than your competition?
  • What is your unique selling point?
  • What’s available to you that your competitors don’t have in terms of resources?

Once you know what your strengths are, you can use the same approach to identify your weaknesses. Consider the following:

  • Which offers performed poorly with your past and current customers?
  • What consistently comes up in negative reviews?
  • What reasons do your customers or clients list for no longer using your services or products?
  • What’s available to your competitors that you don’t have?
  • What do your competitors do that makes them a better choice?
  • How can you do better or what can you do better?

Related: How to get funding for your online business.

Figuring out your strengths and weaknesses shouldn’t take you long. Coming up with opportunities can sometimes be more challenging as you need to consider external data that goes beyond your industry.

To identify your opportunities, you’ll often have to look at the wider economic, business, and global trends.

A few questions that can help you identify your opportunities include:

  • What are some ways we could improve our customer support?
  • Can we automate certain parts of our customer onboarding?
  • Are there any resources we can create to reduce our churn rate?
  • What can we do to improve our customer retention rate?
  • Are we using the tools at our disposal effectively?
  • Are we using the right tools or is there something better out there?
  • What are some ways to improve our brand messaging?
  • How can we make our checkout process easier?
  • Which marketing channels are giving us the best ROI?

Another way to identify potential opportunities is by being aware of what your competition is doing and identifying a gap in their offers and marketing. You can then come up with a way to fill that gap.

The last part of SWOT analysis for your small business is identifying threats.

Unlike opportunities, threats shouldn’t be too hard to identify.

  • Emerging competitors
  • Technological advancements that make certain services or products obsolete.
  • Changes in the global economy that require you to change the way you operate
  • High employee turnover that could threaten your current growth.

(5) What are the 4 SWOT strategies?

The four SWOT strategies are designed to match the company’s strengths, weaknesses, opportunities, and threats to formulate a comprehensive business strategy:

  1. SO Strategies (Strength-Opportunity Strategies): Use internal strengths to take advantage of external opportunities. This could involve using a strong brand reputation to launch a new product line in an emerging market.
  2. ST Strategies (Strength-Threat Strategies): Leverage company strengths to minimize the impact of external threats. For example, a company with a strong online presence might use this to counteract the threat of new entrants.
  3. WO Strategies (Weakness-Opportunity Strategies): Improve internal weaknesses by exploiting external opportunities. A business might use a partnership to bolster its own SWOT analysis by compensating for a lack of certain expertise or resources.
  4. WT Strategies (Weakness-Threat Strategies): Develop plans to address internal weaknesses and avoid external threats. This could involve diversifying the product line to reduce dependence on a single market that is facing economic challenges.

These strategies are integral to the planning process and are essential for effective project management and making informed business decisions. They are often visualized using a SWOT matrix and can be detailed further using tools like PEST analysis.

(6) What’s next?

Throughout this article, we’ve explained what a SWOT analysis is and what each element really means. You’ve learned why a SWOT analysis for your small business is important. We’ve also given you all the necessary steps that show you how to do a comprehensive SWOT analysis so you can improve not only your offers but also your position in the market and your entire marketing strategy.

The next step is to implement those steps and create a direction for your business that’s going to help you achieve your goals, even in hard financial times.

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