The Importance of a SWOT Analysis
The purpose of a SWOT (strengths, weaknesses, opportunities, and threats) analysis is to look at internal and external factors that affect your business. Strengths and weaknesses are your internal factors; and opportunities and threats are your external factors.
A SWOT analysis is a useful tool when brainstorming and doing any form of strategic planning. It can also be used to achieve a specific goal, for example, to respond to a new trend; to take advantage of a new business opportunity; or to implement a new kind of technology.
Building on Strengths
The areas of the business that are performing well are identified using a SWOT analysis. Your business’s competitive advantage is derived from these areas as these are the critical success factors. After identifying these strengths, it is important to maintain them to ensure that your business does not lose its competitive advantage. Growing your business involves finding ways of using and building on these strengths.
Minimizing Weaknesses
Weaknesses place your business at a disadvantage. By conducting a SWOT analysis, you can identify these weaknesses and minimize or improve them before they become a problem in your business. Be realistic about the weaknesses in your business when conducting your SWOT analysis so that it can be dealt with adequately.
Seizing Opportunities
With the help of a SWOT analysis, you can identify opportunities that your business could take advantage of to make increase revenue or profit. Opportunities are external factors that exist outside of the business, for example, new consumer trends and changes in the market that you could take advantage of.
Counteracting Threats
A SWOT analysis can help identify threats that are external factors and ways to counteract them, depending on the strengths and weaknesses of your business. Potential threats include changes in the market or new government policy.
A SWOT analysis is a unique business tool in that it breaks down key factors of your business in a more simplistic manner to help with strategic planning and brainstorming. It breaks down internal and external factors, and further breaks down internal factors into strengths and weaknesses; and breaks down external factors into opportunities and threats. These factors can be used to make informed decisions to improved profitability and increase business activities.
To access our free business health check tool, click the link to complete the form.
By answering 25 questions (approximately 5 minutes), we can provide an indication of where your business is performing well and where you may need improvement across 10 business areas. These areas include Marketing, Sales, Profit, Strategy and Technology, to name a few.
