Launching a new business venture is a major undertaking, and it’s vital that you do your research to make sure you’re prepared. When you’re sizing up the competition and developing a marketing plan, conducting a SWOT analysis is an effective way to identify potential holes in your strategy. It’s something that doesn’t require a significant investment of time but it may generate big returns in terms of your success.
What Is a SWOT Analysis?
A SWOT analysis allows business owners to evaluate their position in the marketplace. “SWOT” is an acronym that stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal to the company, meaning they’re things that you as a business owner have the power to change. Opportunities and threats are external issues that are outside the scope of your control but which can impact your operation for better or worse.
Performing a SWOT Analysis
Many larger companies seek outside help when conducting a SWOT analysis but if you’re a sole proprietor or your business only has a few employees, it’s something that you should be able to do on your own. Whether you use a four-square template or make a simple list isn’t as important as the kinds of questions you’re asking yourself and what you discover about your business throughout the process.
Assessing Strengths and Weaknesses
Start by listing all of your business’s strong points. Some of the things you might want to focus on include what you do well, what unique skills or experience you possess, and what it gives you an edge over your competitors. You also want to include tangible and intangible business assets, such as well-educated, highly capable employees or a significant amount of start-up capital.
The next step is to take an honest look at what areas of your business are ripe for improvement. If you’ve got a product that isn’t making a profit or you’re not very effective at managing your time, these are areas that need to be addressed. Zeroing in on the negatives typically isn’t a pleasant experience, but it’s necessary to ensure your business is taking steps forward instead of backward.
Evaluating Opportunities and Threats
The opportunities section is where you’ll look at where your business is currently, what your short and long-term goals are, and what you need to do to achieve them. You should also be thinking about ways you can help your business grow or expand your existing customer base. This could be something as simple as making an effort to connect on Facebook and other social media sites, or offering a broader range of services. The wider you cast your net, the more opportunities you’re likely to uncover.
Last but not least, you need to identify potential threats to your business’s success. For example, it’s not enough to know who else is offering the same types of products or services. You also have to be aware of what their strengths are and what they’re doing that’s putting them at the top of the market. The more tuned in you are to what could trip your business up, the better equipped you are to head off problems early on.
Why Is All of This Important?
A SWOT analysis can be extremely valuable in shaping your business strategy because it gives you a chance to see things from a new perspective. It may lead to the discovery of a previously untapped niche in your market or help you to pinpoint an obstacle that could hinder your business’s growth. As you reaffirm what your business’s strengths are and correct your weaknesses, you can use this to shape new opportunities and counteract the impact of external threats.