Why SWOT Is One of the Best Tools for your Business

SWOT is one of the most commonly used and most-effective techniques used by business owners today.

Whether you’re trying to get your start-up off the ground, or you’ve been running your own company for the last decade, every business can benefit from conducting a SWOT analysis. 

Here are some tips to keep in mind if you're not sure what SWOT means...

What is SWOT?

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. When conducting a SWOT analysis, you look at your business internally for Strengths and Weaknesses, and then externally for Opportunities and Threats.

Ask yourself the following questions:

• What are my business’s strengths?
• What are its weaknesses?

Then look outside your business to the rest of the world.

• What opportunities can I seize?
• What threats do I need to work to avoid?

Why SWOT?

So why is this necessary? Perhaps you’re thinking that these aren’t questions that need to be asked, that you already know what your strengths are. But when you take the time to sit down and invest time into taking an objective view, you will find yourself uncovering more than you thought, especially when you open the floor to more than one person. You should always bring in at least one other person on a SWOT analysis to point out things that you yourself have missed (because there will always be something).

Simply getting these vague ideas out of your head and down on paper will do wonders for focusing your efforts. By the end of it you will have a list of goals to achieve, areas to work on, and a better understanding of your business.

How to SWOT?

Though not part of the acronym, here is the first step to SWOT that might be missed; research. Perhaps this is left out because it is assumed that you already have a fundamental understanding of your business and the market for it. Or perhaps RSWOT just doesn’t roll off the tongue. Either way, you first need to know what you’re talking about before you begin investigating.

SWOT works best when you have a particular goal in mind. Whether you are trying to rebrand your business, contend with a competitor or implement a new marketing strategy, SWOT will help you find the best path forward.

So, you’ve done your research, you have a goal in mind, now we can get stuck into the nitty gritty.

Strengths – What are your business’s strengths? Do you have good internet traffic, a good number of employees or an overabundance of capital?  Also, look at yourselves and your employees as individuals and try to identify personal strengths.

Weaknesses – Unfortunately, then there’s the downsides. Perhaps you are inexperienced, or you have no industry connections. Whatever it is, writing out all your weaknesses will make sure they don’t go unnoticed and will give you an opportunity to address them.

Opportunities – What opportunities are there in your market that you can exploit. Do you have access to an exotic resource, or can you find a target demographic that seems to be ignored?

Threats – Finally, list the things that you should be on the lookout for. A shift in the market? Being unable to supply enough product to meet demand? If you identify the biggest threats to be on the lookout for you can make a plan of how to either prevent these from happening, or how to deal with them if they do.