The SWOT Analysis is a strategic framework through which you can identify, document, and analyze the internal strengths (S) and weaknesses (W) in your business, as well as external opportunities (O) and threats (T).  You can use this information to extract insights to help with strategic business planning and decision making when positioning your business in the marketplace.

Strengths and weaknesses are within the internal realm of a business and are more or less within your control to change and adjust as you get strategic about your business.

Opportunities and threats are external factors that are describing the current market environment and are not within the direct control of a company.

A SWOT analysis is also a key component of any Business Plan, because it provides you with strategic answers to the internal and external factors that influence the success of your business and because it can be used to develop an effective business strategy and action plan.

Here are the steps you should follow when conducting a SWOT analysis:

To conduct a SWOT analysis for your business you should first get clear about the main objective of the analysis.

For example, if the SWOT analysis is for your initial Business Plan than the objective should be to develop a clear understanding of the competitiveness of your company in the current business environment and use this information to develop a strategic action plan that will guide your business in the coming months and years as you grow your business.

Ideally, you should regularly revisit your SWOT analysis as part of your ongoing strategy process, especially when you introduce a new product to the market or enter a new market segment or when a significant external event happens that significantly impacts your industry and market.

The SWOT analysis includes both internal factors, i.e. the strengths and weaknesses of your business as well as external factors i.e. the opportunities and threats that impact your business. To get the most out of your analysis you should first conduct market research to better understand the industry, market and competition as well as what sets your business apart and makes it unique.

Strengths are positive internal factors that are within your company’s control and describe what your company does best.

To identify your company’s strengths think about the advantages, capabilities, resources, assets, people as well as the mission, vision and purpose your company embraces.

It’s helpful to let your ideas flow freely and create a long list that you can edit and prioritise at a later stage.

Weaknesses are negative internal factors that decrease the competitiveness of your company and leave you at a disadvantage.

You want to acknowledge and in time remedy and minimize your weaknesses.

To identify your company’s weaknesses think about the shortages,  gaps in capabilities, lack of competitive strengths and known vulnerabilities.

Opportunities are positive external factors that increase the range of strategic options for your company and provide you with avenues of growing your business. You want to prioritize and optimize your opportunities.

To identify the external opportunities think about the recent positive developments, economic and market trends, strategic partnerships, access to capital, positive changes in regulations, new customer segments etc.

Threats are negative external factors that decrease the range of strategic options your company has and pose challenges to the development and viability of your business. 

To identify the external threats think about the recent negative geopolitical developments, economic and market trends, lost partnerships, lack of access to capital, negative changes in regulations, lost customer segments etc.

Now that you have completed your SWOT analysis, you have a key component of your Business Plan and a strategic tool to make smart decisions about the direction you want your business to take.

You should revisit your strengths, weaknesses, opportunities and threats, and choose the most important 5 in each category.

Once you have your top 5 in each category sorted out it’s time to develop an effective action plan by answering these questions:

✓ How can we use our strengths to take advantage of our opportunities? 

✓ How can we use our strengths to help overcome existing threats?

✓ Which weaknesses can be overcome to maximize our success?

✓ What strategies can we put into place to be prepared for threats?

✓ How can you minimize your weaknesses and avoid threats?

Use your answers to distill what initiatives you can implement to strategically put your SWOT insights to work.

Map the initiatives you’ve identified in step eight in four buckets according to their expected impact and investment requirements and select the ones that fall into the high impact low required investment first, high impact high investment second and low impact low investment third and de-prioritise the remaining ones.

Include the top priority in your execution calendar and schedule specific activities and allocate the necessary resources (time, people, money) to execute on them in the coming months.

Include your top initiatives in your execution calendar and schedule specific activities and allocate the necessary resources (time, people, money) to execute on them in the coming months.

Set-up a process to regularly revisit your SWOT analysis as part of your ongoing strategy process, for example when introducing a new product to the market or entering a new market segment or anytime a significant external event happens that impacts your industry and market.

Download our FREE SWOT Analysis Workbook below and get started today!