SWOT analysis - What is a SWOT analysis?
A SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis provides a framework for determining these important factors when making big decisions for a business
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The SWOT analysis is a way to evaluate some crucial elements of your business, as well as how it relates to your market and with competitors. While this analysis can, in theory be applied to even your personal life, it was developed by business and management consultant Albert S. Humphrey in the 1960’s to be used for business purposes.
The results of a SWOT analysis can indicate areas in which your business can be strengthened, and also ways in which it can become more competitive on the market and exploit a particular niche, for example.
By examining these four factors of your business, you can gain important insight into how to improve on your success by focusing on strengths and taking advantage of opportunities as well as be better placed to prevent or manage difficulties in the future by understanding existing weaknesses and threats.
A SWOT analysis can also be run on a smaller scale, such as on projects, giving you a better idea of how/whether those particular projects or campaigns are benefiting your business.
In this context, we’ll look at SWOT as applied to a business as a whole.
What SWOT means - a breakdown
Acronyms are undeniably popular in the business world. Many are short-lived but some are important to understand and can mean a better understanding of a particular aspect of running a business. The SWOT analysis is one that should not be overlooked when it comes to evaluating your business.
S - Strengths
The strengths of a business refer, naturally, to the positives. Namely:
- What you’re already doing well
- How you distinguish your business from competitors
- Unique knowledge or know-how held by you or employees
- Tangible assets that your business currently possesses
- Any other internal resources that contribute to your business
The strengths of your business can be unique and specific or general, but it’s good to have a solid understanding of where and what you’re doing well in order to capitalise on those elements.
Useful questions for determining business strengths:
- What does your business do best?
- What do your customers say you do best?
- What’s your USP (Unique Selling Point)?
W - Weaknesses
Also seemingly straightforward is determining the weaknesses of your business, including:
- Things you’re aware could be done better
- Areas in which competitors are outperforming your business
- Whether you’re low on/don’t have access to particular resources
- If your business needs a clearer sales strategy
Among others, these main points can help you to identify any weaknesses that exist in your business.
Useful questions for determining business weaknesses:
- What has caused you to lose sales in the past?
- What negative feedback have you received from customers?
- What are your competitors doing better?
O - Opportunities
Finding and making the most of opportunities can be essential to building success for your business. Opportunities can come in many forms, such as:
- Markets where your product or service is doing well
- A small number of competitors
- Becoming part of a growing market
- Potential to be featured online, or by local publications or tv programs
- Advances in technology
These situations all provide potential opportunities for growth of your business. Keep your eyes and mind open when it comes to opportunities.
Useful questions for determining business opportunities:
- Are there any new trends in your industry?
- Are there changes to local regulation or markets that could benefit your business?
- Are there any business relationships you could strengthen?
T - Threats
Every business deals with threats. Threats can also come in different forms and can change over time with the growth of your business, for example:
- Obvious threats such as new competitors in your market
- Changes to legislation or regulation that affects costs
- Negative word of mouth, online reviews, or other coverage of your business
- A change in how your business is perceived by customers
- Poor management of finances
Threats can vary by industry and also by the size of your business. Being able to identify and understand potential threats to your business can put you in a better standing for dealing with them in the future.
Useful questions for determining business threats:
Are competitors taking advantage of new technology you’re not using?
Do you have any major challenges to improving your stance in the market?
Applying the SWOT analysis
A SWOT analysis can be conducted by an individual, or can even be a useful team exercise depending on the topic. As a small business owner or manager using SWOT analysis to gain a better understanding of their business, it’s important to set aside time to go in-depth and conduct the necessary research.
The SWOT analysis begins by asking yourself a series of questions, such as the ones listed above, and developing thorough answers to each question. This will allow you to start building a comprehensive list and picture of what strengths and opportunities, as well as weaknesses and threats your business faces at the current point in time.
Why the SWOT analysis is helpful
Identifying and gathering this information will give you a clearer understanding of where your business is vulnerable, where you’re not making the most of it, which can help you to develop strength in these areas, as well as what is going well and should be continued.
You’ll develop a better understanding as to how your business functions as whole. Plus, once you have conducted one SWOT analysis, you’ll likely see how useful it can be in any number of other situations (such as smaller scale projects).
The results of your SWOT analysis can be included in planning for the future, for example where you’ll put more focus in development, areas you might need to build a new campaign or project, as well as a more focused budget.
SWOT analysis and invoicing & accounting software
A major strength for any business is the keeping of accurate, timely, and thorough records. This includes income and expenses, as well as the documentation side: invoices, credit notes, payment receipts, and more.
By maintaining a strong financial , you put your business in a better position for focusing on other possible threats or opportunities. It’s one less thing to worry about, and it’s easier than ever with online accounting & invoicing software like Debitoor.