In Part 5, we explored what a SWOT analysis is and its advantages and why it is beneficial to do a SWOT analysis.
We clarified that it is a basic but very efficient tool for entrepreneurs to get the necessary information they need to create a new strategy for their business.
In today’s blog post, I will share how to do the SWOT Analysis, which questions to ask when assessing the four aspects of your business (Strengths, Weaknesses, Opportunities, Threats) and what next steps to take after the SWOT analysis is done.
- How is a SWOT analysis done correctly?
- What questions can you ask as part of your analysis?
- What is the best way to use a SWOT analysis?
- What are your next steps after the SWOT analysis is done?
How is a SWOT analysis done correctly?
- First, draw up a SWOT analysis matrix, as shown below. This is a 2×2 grid, with one square for each of the four aspects of SWOT.
- Use brainstorming techniques to build a list of ideas about where your company currently stands. Every time you identify a Strength, Weakness, Opportunity, or Threat, write it down in the relevant part of the grid.
- Strengths and Weaknesses are internal factors – for example, the company´s assets, processes, and people.
- Opportunities and Threats are external factors, arising from your market, your competition, and the wider economy.
The SWOT analysis applied:
- Hand out pads of sticky-notes and have everyone quietly generate ideas and write them down. This prevents groupthink.
- After five minutes of brainstorming, put all the sticky-notes up on the wall and group similar ideas together.
- Once all of the ideas are organized in groups, rank the ideas in order of importance.
- Follow this process for each of the four quadrants of your SWOT analysis.
- Strengths describe what a company excels at and what separates it from the competition: a strong brand, loyal customer base, unique technology, etc.
- Weaknesses prevent a company from performing at its optimum level. These are areas where the business needs to improve to remain competitive: weak brand, higher-than-average turnover, high levels of debt, an inadequate supply chain, lack of capital, etc.
- Opportunities refer to favorable external factors that could give a company a competitive advantage.
- Threats refer to factors that have the potential to harm a company. Common threats include rising costs for materials, increasing competition, tight labor supply, etc.
What questions can you ask as part of your analysis?
Strengths bring your company a clear advantage. This is within your control.
- What values drive your business? What is your company´s Unique Selling Proposition (USP)?
- What competitive advantages has your company compared to other companies? Example: the motivation of your staff.
- What strengths might your competitors see in your company?
- What assets do you have in your team, such as knowledge, education, network, skills, and reputation?
- What physical assets do you have, such as customers, equipment, technology, cash, and patents?
Now it’s time to consider your company´s weaknesses. Be honest and realistic, and face any unpleasant truths as soon as possible. A SWOT analysis will only be valuable if you gather all the information you need. Your focus should be on your people, resources, systems, and procedures. You might need to improve on them to be competitive.
- What could you improve? What practices should you avoid?
- How do other people in your market perceive you? Conduct a survey or interviews.
- Do others notice weaknesses that you tend to be blind to?
- How and why are your competitors doing better than you?
- What are you lacking?
- What business processes need improvement?
Opportunities are openings or chances for something positive to happen. Being able to spot and exploit opportunities can make a huge difference to your company´s ability to be successful.
- What developments might arise in the market you serve?
- What interesting market trends are you aware of, large or small, which could have a positive impact that will encourage people to buy more of what you are selling?
- Are there upcoming changes to regulations that might impact your company positively?
- If your business is up and running, do customers think highly of you?
Threats are external factors that you have no control over. You may want to consider putting in place contingency plans for dealing with them if they occur.
- What threats can you anticipate and take action against?
- What obstacles are you facing to sell your product?
- What are your competitors doing?
- Do you have potential competitors who may enter your market?
- Will suppliers always be able to supply the raw materials you need at a reasonable price?
- Could future developments in technology change how you do business?
How to use a SWOT analysis
Once you’ve examined all four aspects of SWOT, you’ll likely be faced with a long list of potential actions to take. You’ll want to build on your strengths and exploit every opportunity and minimize the weaknesses and threats. Before you take any action, look for potential connections between the quadrants of your matrix and ask yourself:
- How could I use my strengths to open up new opportunities in my business?
Now prioritize your ideas. Refine each point to make your comparisons clear. For example, only accept precise, verifiable statements.
What are your next steps after the SWOT analysis is done?
Start to look at your strengths and figure out how you can use those strengths to take advantage of your opportunities. Then, determine how your strengths could combat the threats. Use this analysis to produce a list of actions that you can take and ask yourself:
- What do I want to accomplish each month moving forward?
With your goals and actions in hand, you’ll be a long way toward completing a strategic plan for your business. Now, you’re ready to convert it into a real strategy. The actions that you generate from your SWOT analysis will give you a concrete foundation that you can grow your business from.
What strategy is right for your business?
Every strategy depends on the circumstances your business is operating in. In one of my later blog posts, I will explain the different strategies you can use.
Key Point #1: A SWOT analysis is a useful framework for analyzing your company’s strengths, weaknesses, opportunities, and threats.
Key Point #2: A SWOT analysis helps you build on what you do well, address what you’re lacking, minimize risks, and take the greatest possible advantage of chances for success.
Key Point #3: A SWOT analysis is a powerful tool to help you develop your business strategy.
I´m available to support you through this difficult time by re-imagine your business. A SWOT Analysis is a good starting point to determine where you currently are in your business and what you´ll need to change to turn your business around.
I will work with you and your leadership team to analyze the company´s core strengths, weaknesses, opportunities, and threats. We will develop a tailored action plan to help you implement the goals. The aim is to get your business running at its peak performance.
Contact me for a complimentary 30-minute strategy session:
Coming up next month…
In my next blog post, I’ll share how to use the TOWS matrix.
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