Conducting a SWOT Analysis for Your Small Business

Having the right tools and methodologies to assess your business can have a positive effect on your ability to react to change and take preemptive actions that could benefit your business. Read further to learn more about SWOT analysis and how you can use it to your advantage as a business owner.
 
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What is a SWOT analysis and why is it important?

A SWOT analysis is a method that businesses use to assess the good and bad aspects of their business side-by-side. Conducting a SWOT analysis can potentially benefit your business in the following ways:

  • Helps you see the bigger picture through an overview of your business
  • Allows you to evaluate niche areas of your business
  • Establishes ways to improve and adapt your business
  • Promotes the longevity of your business

 

What does SWOT stand for?

SWOT stands for strengths, weaknesses, opportunities and threats and can be broken down into these areas within your business:

 

Strengths

Your company’s strengths can include anything you consider to be a positive attribute to your success. Here are some examples:

  • What your company does well (recognizable brand identity, presence in philanthropy)
  • What makes you stand out among competitors (better pricing, 24-hour customer service)
  • What makes your company work well at the internal level (procedures, values, talented employees)
  • Assets (trademarks, property, machinery)

 

Weaknesses

Your company’s weaknesses can include anything that you believe could be improved within your company, such as:

  • Things that could benefit your company that you don’t have (website, store location, customer service department, communication channel)
  • Things your competitors have that you don’t (lower prices, better quality products, multiple locations)
  • Limited internal resources (under-trained staff, lack of HR department to help expansion)
  • Unclear purpose within your industry (lack of uniform brand identity, customers confused about what exactly you offer)

 

Opportunities

Your company’s opportunities refer to anything you deem as a potential benefit to your company goals, which may include:

  • Niche markets for your products or services (industries to move into that could expand your customer base)
  • Limited competition in your area (less competition could create more business for you)
  • New purpose for your products or services (provides an opportunity for revamping your brand)
  • Press engagement (gives you an additional platform to market your business)

 

Threats

Threats to your company means anything that could hurt your success. This can be broken up into the following categories:

  • Up-and-coming companies in your industry (better prices, growing popularity, closer proximity)
  • Decrease in popularity with customer-base (financial risk, loss of sales, negative reviews)
  • New laws and regulations that make business difficult (raised taxes, overtime work regulations)
  • Bad press (misleading information, negative public perception)

 

How to conduct a SWOT analysis with examples

Here is a step-by-step guide to help you conduct a SWOT analysis:

 

1. Establish your reasoning for conducting a SWOT analysis

Before you can use the SWOT acronym to review your business, you need to identify the purpose for conducting one in the first place. You might want to conduct a SWOT analysis to get an overview of your business or to assess the value of a particular department.

Example: An IT company decides to do a SWOT analysis on their customer service department because their customer base is growing and they want to know if their existing department can handle new demands.

 

2. Perform research into industry changes, competitors and your business

Next, do research on new industry trends, your competitors and your own business. Your reasoning for conducting a SWOT analysis will help determine the focus of your research.

Example: An online clothing boutique conducts a market analysis to identify new clothing trends, evaluate how they compare to competitors and gauge the public’s perception of their own services.

 

3. Make a list of your business’s strengths

Using your research, create a list of everything your business is doing well at the moment.

Example: A staffing firm uses its research to determine that it has the following strengths:

  • More locations within Florida than any other Florida-based firm
  • Diverse staffing services across trade professions and the finance, healthcare, marketing and information technology industries
  • Recruiting staff with diverse professional backgrounds, which enables them to evaluate and select the best candidates for clients

 

4. Make a list of your business’s weaknesses

Reflect on the areas your business could improve by making a list of weaknesses.

Example: An Italian restaurant located in the Bronx neighborhood in New York City determines that they have the following weaknesses:

  • There are 14 other Italian restaurants currently in the Bronx.
  • They have a small dining space with limited seating capacity.
  • They don’t have a website or online presence.
  • They only cater to a niche group of customers, typically people 55+ years of age.

 

5. Make a list of your business’s potential opportunities

Get inspired by coming up with potential opportunities based on industry trends or current events in your company.

Example: A local marketing firm develops the following list of opportunities based on their limited client base.

  • Expand business to include clients in five more counties.
  • Offer 20% discounts to previous clients for new campaigns.
  • Expand offerings to include event marketing.

 

6. Make a list of your business’s potential threats

Use your research to determine a few potential threats to your business and its continued success, which can help you focus your strategic plan.

Example: A lifestyle magazine determines the following potential threats to their business:

  • Decline in print sales
  • High volume competition in lifestyle content
  • High employee turnover rate
  • Regulations on claims made in health and wellness section

 

7. Decide which items need immediate action

Review the items you listed in each category and make a separate list ranking those that are the most important. This can help you identify one or more items that you should focus on immediately.

Example: A wedding venue decides that the first area they need to focus on is how to remain relevant with the increased competition in the area. This could potentially hurt their sales because they used to be the only venue within 80 miles.

 

8. Create a plan of action based on priorities

Work to create a plan to resolve problems or initiate change to better your company.

Example: The event venue decides to enact the following strategies to stay successful:

  • Create a partnership with another venue so wedding parties can have a different venue for the wedding and reception.
  • Expand services to private parties and corporate retreats.
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