As a business owner, you've probably heard that you need to perform a "SWOT Analysis"... But maybe you aren’t entirely sure why or even more importantly, how to do it… Especially if you don’t even know what it is and what it means for your business.
In a nutshell, doing a SWOT analysis is vital, because it helps you know where your business stands.
It’s a known fact that 90% of startups fail before their fifth year, and assessing where your business stands helps you avoid common pitfalls that might lead to the same fate.
And performing a SWOT Analysis is one of the major ways you can know exactly where your business stands and avoid said pitfalls so your business doesn’t become another statistic.
In this post, we will define SWOT Analysis, explain why you need to conduct one, and show you how to do it. Plus, there will be plenty of examples along the way.
Ready? Let's begin.
What Is a SWOT Analysis?
SWOT Analysis is an acronym for:
It's an approach that you use to evaluate your business and know whether it is on track to reach its growth projections and whether its performance reflects that. You can use it to assess individual projects, a department, or an entire organization.
Why Do You Have to Identify the SWOT of your Business?
Since you started your business, you probably know everything about it right? Wrong. While you might think you have every little detail about your business at your fingertips, here are three valid reasons you need to conduct a SWOT analysis:
1. To identify your strengths.
Once you know what your company excels in, you can do even more in those areas and consolidate your position in the market.
2. To uncover weaknesses.
A SWOT Analysis lays bare all the areas where you are not doing well. You can then draw up plans and strategies on how to improve.
3. To sharpen your focus
As an entrepreneur, it's easy for you to become so absorbed in the running of your company that you get off track totally unaware. Assessing your performance helps you refocus on metrics that matter and get back in line.
Jeremy Moser from uSERP puts it this way:
"Conducting a SWOT analysis can seem trivial, but it helps you uncover critical elements of your business to focus on. Whether it's finding strengths or low hanging fruit, a SWOT analysis gives you one key thing that you need as a small business: a focus."
How Do You Conduct a SWOT Analysis for a Business?
Let's now look at the steps you take when doing a SWOT Analysis. We will follow the four components of the process.
Strengths are the internal components you have going for you which cover:
- Aspects your business is good at.
- Good qualities and unique skills that put you ahead of the competition.
- Sufficient resources like skilled manpower and technology in a place like business networks to stay connected.
- Assets, e.g., buildings, capital, technology.
- Quality software and tools that can integrate with finance like mobile form data, Salesforce, and cloud-based accounting software
To gauge your organization's strengths, ask yourself these questions:
- What are your standout positive brand attributes?
- Do you have extensive experience in your industry?
- What resources do you have that your competitors don't have?
- Do you have a unique selling proposition your competitors are afraid to copy?
- What's the one good thing customers can only get from you?
To make it even easier to identify your strengths, look at how hyper-focused you are whether it's the product you’re selling or the market you’re targeting. The more focused your product, the more persuasive it will be.
Their key strength is providing AI in their calendar solution (technology), taking the hassle out of scheduling meetings and events.
You can also find a specific niche and position your business to become a go-to resource for your customers.
Weaknesses are the internal issues going against you which include:
- What your business doesn't do well (e.g., team management)
- What your competitors are doing better than you.
- Lack of resources, such as insufficient capital.
- Areas where you need further training and education.
To uncover your company's weaknesses, pose these questions:
- What do your customers complain about most?
- Is your business located in the right place?
- Perform a website analysis and determine if your website is user-friendly?
- Which areas must you improve on to catch up with competitors?
- What skills must you gain to improve?
Weaknesses don't spell doom for your business as long as you will invest in changing them by reassigning more resources to improve your product or service.
Opportunities are the growth channels which include:
- Current customers who want more from you.
- A new and ready market that's waiting for your product/service.
- Hardly any competitors in your area/space.
- Related products and services you can provide.
- Areas to expand internally via employees or hiring freelancers
To spot opportunities your business can exploit for growth, ask yourself the following questions:
- How can you do more for your current customers?
- Are there any changes in the market you could take advantage of?
- Is there positive publicity you can maximize?
- Is there a tool you can afford that can explode your business? E.g., marketing automation tools and sales tools to scale your marketing strategy on autopilot.
- Can you allocate a higher budget to your top-selling products?
Opportunities for growth are all around you. You just have to pay attention to them.
As we speak, there are over 440 million blogs your potential customers have to read. That’s no chump change. That makes it even harder to stand out when you first learn how to start a blog given that you’re also competing against established brands.
However, you still have an opportunity to drive traffic to your blog through Pay Per Click advertising and a solid keyword research strategy to drive users to your blog and convert them into leads.
Threats, external forces that pose a danger to your success, can include:
- The emergence of a strong competitor.
- A nosedive in the economy.
- Negative press coverage.
- A new law that hampers your business operations.
- A negative shift in how customers perceive your brand.
- Poorly written legal forms to protect your business.
To see the threats that can harm your business, ask these questions:
- Has your competitor released a new product that makes yours look inferior?
- Are you having trouble getting raw materials?
- Has your competitor significantly improved their product?
- Is your churn rate way above average?
Threats to your organization are external, and you don't have control over them. But you can prepare for them or take strategic corrective measures to blunt their impact.
Say you notice everyone in your niche runs blogs, and the competition is fierce. You can create an opportunity by switching to a new, uncrowded channel by learning how to make a podcast to build an audience and increase brand awareness.
How To Gather SWOT Analysis Data for Your Small Business
Now that you know which questions to ask, here are different methods to use and get the answers you need:
1. Customer Reviews
Scour through your customer reviews to discover both your strong points and weak areas.
2. Qualifications Audit
Examine your team's professional qualifications to see the expertise at your disposal and the knowledge gaps you must fill.
3. Brainstorming Session
Convene a meeting for all your workers and have an honest discussion about your organization and its performance.
4. Focus Group Discussion
Gather your best customers and have a no-holds-barred discussion about your performance and how customers at large perceive your brand. Better yet, send out a survey to your email list as part of your quarterly email marketing strategy to those who are already warm to your brand.
If you don’t have a focus group yet, set aside some money to conduct online paid surveys just like Swagbucks does.
5. Competitor Research
Research your competitors using various online tools such as Ahrefs, SEMrush, and SpyFu. With several dashboards to log in and out of, a password manager can be handy to protect data privacy.
SWOT Analysis: Start Yours Today!
As a small business owner, it's easy to get caught up running your business and forget to take a moment to evaluate how well you’re doing. And I’m not talking about looking at your numbers. It's about going deep and uncovering the good and bad stuff about your business to know where you stand. However strong the urge may be to keep going, resist it.
Take a moment to pause, reflect, and course-correct by conducting a thorough SWOT Analysis. Your business will be better for it.