A SWOT analysis can be beneficial for any existing business, but especially for new or not-yet-off-the-ground upstarts. For the uninitiated, it stands for strengths, weaknesses, opportunities and threats. The concept is credited to Albert S. Humphreys, among others, as part of a research project at Stanford in the 1960s.
First, some tips on how to approach doing a SWOT.
- It takes time: A SWOT may not seem like a long exercise, but it can be. You will need to reserve several hours, perhaps over a couple of days, to make sure you get it right. If you have the means to reserve a conference room outside of the normal working space, that can help get the creative juices flowing. Get whatever treats help that as well (coffee, water, snacks, lunch).
- Get all the essential people in the room: SWOTs can inspire debate, which is a good thing. You’ll need all the important people who are helping you to weigh in on the analysis.
- Bring all crucial documentation: The areas you’ll be analyzing include competitors and overall market impressions. Any data or studies you can bring to share with the group will help.
- Be brief: A SWOT shouldn’t be a thesis. Ideally it would fit on one page, with each of the four categories taking up a quarter of the space. Use bullet points for each note in the four blocks, not long and detailed sentences.
- But be thorough: Throw every idea at the wall and see what sticks. You can trim out the lesser stuff later.
Now, let’s move on to the four categories. Strengths and weaknesses are considered internal, as in they are under your control. Opportunities and threats are regarded as external, or out of your control.
- Strengths: This explores the best parts of your business that can lead to success. What does your team do well? Break it down into the various departments to show the full potential. What resources do you have that are key to your success? What expertise does your personnel have that others don’t? Other possible topics include you or your staff’s longevity and knowledge in the market and history with customers.
- Weaknesses: This focuses on matters that can prevent your business from flourishing. Where is your expertise lacking? What resources — financing, equipment, technical knowledge — do you need? Is your staffing model insufficient? For a new business just trying to get off the ground, this list may be extensive. That’s OK. Just get it all out there.
- Opportunities: This examines the your local industry and where you fit in. What trends in interests and demographics are advantages for you? What areas in the marketplace are being underserved that you can target?
- Threats: This digs into your competition, whether actual or potential. It can include changes based on demographic or technological shifts, the state of the economy or other companies that perform the same or similar tasks as yours.
Once you have all your SWOT elements out there, try to tighten it. What’s crucial and what’s not? Trim out the nonessential items.
Then look at what’s left. How do your strengths and weaknesses look when they’re matched up together? How do your strengths connect to your opportunities? How do your weaknesses tie into your threats?
It’s a worthwhile exercise, and hopefully you will have a clearer picture of your business strategy after you’re done.