A SWOT Analysis can be a useful technique for all businesses but especially new businesses. SWOT can help to identify strengths and weaknesses as well as business opportunities and threats. The term SWOT is an acronym for strengths, weaknesses, opportunities, and threats. Used in a business context, SWOT analysis can be helpful in carving out a sustainable niche in your target market.
SWOT analysis was created by Albert S. Humphrey in the 1960s and continues to be a useful tools for businesses today. When performing a SWOT analysis, it is important to keep in mind that strengths and weaknesses are normally internal to your business, while opportunities and threats often relate to external factors. Because of the internal and external factors, SWOT is sometimes referred to as Internal-External Analysis.
Performing a SWOT Analysis
A SWOT analysis can easily be performed by answering some simple questions about your business or perspective business. SWOT analysis can be a useful tool in business planning as it can help to identify weaknesses that can be corrected before your business is up and running.
The strengths of your business should be considered from both an internal perspective and from the perspective of your customers. If you have trouble identifying strengths, it can be helpful to create a list of your business’s characteristics, some of which are likely strengths. Strengths should also be looked at in relation to your competitors.
- What are the advantages of your organization?
- What can you do or offer better than others?
- What do your customers see as your strengths.
- What unique resources do you have available that others may not have access to?
Weaknesses should be considered from an internal and external perspective and it is best to be realistic when identifying your weaknesses.
- What can you improve?
- What should you try to avoid?
- What do you think your customers see as your weaknesses?
- Are there factors causing you to lose sales?
When looking at your opportunities it can be helpful to examine your strengths to see if they can open up opportunities. Good opportunities can come from things such as changes in social patterns, local events, changes in your market, or changes in policy related to your business field.
- Are there any good opportunities you can think of?
- What are the interesting trends related to your business?
- What obstacles does your business face?
- Are there things your competitors are doing that you could be doing?
- Are changes in technology threatening your business?
- Do you have weaknesses that could seriously threaten the health of your business?
- Are the standards, products, or services of your business changing?
- Does your business have cash flow issues or bad debt?