A SWOT Analysis is an integral part of any good business plan. Whether you’ve been in business for ten years or you’re just getting specifics together for a new product, a thoughtful SWOT analysis will inform every part of your business.
SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. You can use a simple list to conduct your analysis, but it’s most commonly formatted using a SWOT diagram.
The basics of a SWOT Analysis
When coming up with your list of strengths and weaknesses, think about factors internal to the company like patents, expertise, staff, funding, location, etc.
When thinking about your list of opportunities and threats, think about external factors like suppliers, competitors, prices, the market, etc.
Strengths and weaknesses are things you can control and can be changed, with varying degrees of effort.
Opportunities and threats are things that exist in the world or market regardless of what your business does. You most likely can’t change these things.
When should you conduct a SWOT Analysis?
Existing businesses will want to do a SWOT Analysis under two circumstances:
- In response to a changing environment, so they can assess and respond proactively.
- At regularly scheduled strategy meetings.
New businesses will use the SWOT Analysis to help formulate their business plan. It’s an initial step towards creating a cohesive strategy that will be unique to their business.
How to conduct a SWOT Analysis
The more perspectives you can get involved in your SWOT Analysis, the better. Include people across your company to help you understand the particular strengths, weaknesses, opportunities, and threats that face every department at every level.
This exercise is also an opportunity for different departments to connect and align with the grander vision of the company. Participation encourages adherence to the resulting strategy and makes every part of the company feel included in and integral to driving business forward.
A SWOT Analysis diagram is simple to create (and we offer multiple templates for it in Cacoo). It’s made up of four squares, laid out two by two, each labeled as one of the four sections.
You can ask your team to prepare ideas before coming to your meeting, but active and collaborative brainstorming should be encouraged. As different perspectives bring new ideas to light, you’ll begin to identify the most important and unifying elements.
You don’t need to elaborate on any one point too much within the diagram. Bulleted points for each item will suffice. Plus, it will make it much easier to organize, which is the next step.
Once you’re finished brainstorming, it’s time to prioritize your items with the highest priority listed at the top of each section in descending order. Remove items that won’t have a significant impact on the business. At the end, you should have a finalized version of your SWOT Analysis.
Questions to guide your SWOT Analysis
If you’re not sure where to start, here are a few questions to help guide the conversation. This is by no means an exhaustive list of things that can or should be discussed during this exercise.
Strengths (internal, positive factors)
When listing your companies strengths, you want to think about internal, positive factors that are within your control.
- What does your business do well?
- What kind of resources does your business have?
- What expertise does your staff have?
- What assets does the company have?
- What advantages do you have over your competition?
Weaknesses (internal, negative factors)
When listing your companies weaknesses, you want to think about internal, negative factors that detract from your business’s ability to reach its greatest potential.
- What areas of your business need the most improvement?
- What kinds of resources does your business lack?
- What expertise does your business lack?
- What assets does your company lack?
- What disadvantages does your business face compared with your competition?
Opportunities (external, positive factors)
When listing your companies opportunities, you want to think about external, positive factors that your business could prosper from.
- What about the current state of the market can you benefit from?
- Are there any recent changes in the market that have created new opportunities?
- How could you acquire more resources, expertise, or assets?
- How important is timing to any of the opportunities you identified?
Threats (external, negative factors)
When listing your companies threats, you want to think about external factors beyond your control that could put your business or strategy at risk.
- What about the current state of the market could hurt your business?
- Are there any recent changes in the market that have diminished previous opportunities?
- What strategies are your current and potential competitors using?
- Are there threats to your existing resources, expertise, or assets?
- How important is to react to these threats immediately?
Developing strategies from your analysis
Once you have completed and prioritized your SWOT results, it’s time to use those insights to develop strategies for your business.
To do this, look at how your diagram sections overlap in the following ways:
- Strength-Opportunity Strategies: Can any of your strengths be used to maximize your opportunities?
- Strength-Threats Strategies: Can any of your strengths be used to minimize your threats?
- Weakness-Opportunity Strategies: Can any of your opportunities be used to minimize your weaknesses?
- Weakness-Threats Strategies: Can any of your opportunities be used to minimize your threats?
As internal and external factors change, your strategies will need to adapt to them. It’s important to conduct a regularly scheduled SWOT Analysis of your business to make sure you’re pivoting your strategies regularly and accurately.
Searching for the right diagramming tool?
Check out Cacoo, a diagramming tool for better team collaboration.