How to Conduct a SWOT Analysis in Business

What is a SWOT Analysis and How to Do It Properly

      The core purpose of a SWOT analysis is to help you develop a sound business strategy by ensuring that you have considered all of your business' strengths and weaknesses, and the opportunities and threats your business faces in the marketplace.

What is SWOT Analysis?

SWOT stands for Strengths, Weaknesses, Opportunities and Threats, SWOT analysis is a technique to assess the four aspects of a business.

A SWOT analysis is a tool that can help you analyze what your company can do best at the moment, and develop a successful strategy for the future.

A SWOT can also reveal areas of your business that are holding you back, or that your competitors could exploit, if you don't protect yourself.

A SWOT analysis examines external and internal factors, i.e. things that happen outside and inside the organization. Some are under your control and some are not. Whatever the case, the wisest course of action you can take in response will become clearer once you have discovered, recorded, and analyzed as many factors as possible.

Why Conduct a SWOT Analysis in Business?

When you take the time to perform a SWOT analysis, you will be armed with a solid strategy for prioritizing the work you need to do to grow your business.

You may think you know everything you need to do to succeed, but a SWOT analysis will make you look at your business in a new way and perspective. You will see your business strengths and weaknesses, and how you can leverage them to take advantage of the opportunities and threats present in your market.

When Should You Counduct a SWOT Analysis?

You can use a SWOT analysis before you commit to any company action, whether you're refining internal policies, exploring new initiatives, considering opportunities, or changing plans midway through.

You can also conduct a general SWOT analysis to examine your business landscape, so you can improve your business operations as needed.

Such analysis can show you the key areas in which your organization is performing optimally, as well as which operations need adjustments.

By taking the time to compile a formal SWOT analysis, you can see the whole picture of your business.

You can find ways to improve or eliminate your company's weaknesses and exploit its strengths.

While the business owner should be involved in creating a SWOT analysis, it is often beneficial to include other team members in the process.

Solicit input from your various staff and openly discuss each contribution made. The collective knowledge of the team will allow you to adequately analyze your business from all angles.

How Do You Write a Proper SWOT Analysis?

Build a SWOT analysis embroil identifying and analyzing the strengths, weaknesses, opportunities, and threats of a company. It is recommended to first make a list of questions to answer for each element.

Questions serve as a guide for completing a SWOT analysis and creating a balanced list.

The SWOT template can be constructed in a list format, as free text, or as a 4-cell table, with dedicated quadrants for each element. The strengths and weaknesses are listed first, followed by the opportunities and threats. (investopedia.com)

How to Do a SWOT Analysis in a Proper Way

You certainly want to assemble a team of competent people to do a SWOT analysis.

You don't need an all-day retreat to complete it. Two hours maybe more than enough.

Gather the right people

Bring people from different parts of your company together, and make sure you have representatives from every department and team.

You will find that different groups within your company will have possibly different perspectives and it is very important to make your SWOT analysis successful.

Throw your ideas at the wall

Conducting a SWOT analysis is akin to a brainstorming meeting, and there's a right and wrong way to go about it.

Give everyone sticky notes and have everyone come up with their own ideas for starting something. It discourages groupthink and ensures that all voices are heard.

After 5 to 10 minutes of personal brainstorming, post all the sticky notes on the wall, and group similar ideas.

Allow anyone to add additional notes at this point if someone else's idea triggers a new thought.

Rate the Ideas

Once all the ideas have been compiled, it's time to rank the ideas. You could use a voting system where everyone gets 5 or 10 "votes" that they can share as they please. Different colored sticky dots are useful for this part of the exercise.

By voting, you should have a prioritized list of ideas.

Of course, the list is now up for discussion and debate, and someone in the room should be able to make the final say on those priorities.

This is usually done by the CEO, but can be delegated to others who are responsible for business strategy.

You want to follow a process of generating ideas for each of the four quadrants of your SWOT analysis: Strengths, Weaknesses, Opportunities, and Threats.

Here are some questions you can ask your team when building a SWOT analysis. These questions can help explain each section and trigger creative thinking.

Strength

Strengths are the internal and positive attributes of your company. These are things within your control.

- What business processes are successful?

- What physical assets do you own, like equipment, customers, technology, cash and patents?

- What asset do you have on your team? (knowledge, education, network, skills, and reputation)

- The competitive advantage you have over your competitors

Weakness

Weaknesses are negative factors that diminish your strengths. These are things that you may need to improve to be competitive.

- Are there things your business needs in order to be competitive?

- Are there any gaps in your team?

- What business process needs to be improved?

- Are there tangible assets your company needs, such as money or equipment?

- Is your location ideal for your success?

Opportunity

Opportunity is an external factor in your business environment that contributes to your success.

- Is your market growing and is there a trend that will encourage people to buy more of the products you sell?

- If your business is up and running, do customers value you the most?

- Are there upcoming regulatory changes that may have a positive impact on your company?

- Are there any upcoming events that your company could use to grow your business?

Threat

Threats are external factors that you cannot control. You might consider making a contingency plan to deal with it if it does.

- Will the supplier always be able to supply the raw material you need at the price you need?

- Do you have any potential competitors who could enter your market?

- Has consumer behavior changed in a way that could have a negative impact on your business?

- Could future developments in technology change the way you do business?

- Are there any market trends that could pose a threat?

The Next Step with Your SWOT Analysis

With your goals and actions in hand, you will finalize the strategic plan for your business.

Use lean planning methodology for strategic plans and regular business planning.

The actions you result from your SWOT analysis will fit into the milestones section of your lean plan, and will provide you with a concrete foundation for growing your business.