A SWOT analysis is a system used to define your strengths, weakness, opportunities, and threats. It can be done on an individual project or a company. Strengths and weaknesses are internal to the company, things that you have some control over and can change. Opportunities and threats are external things that are going outside your company where you have little influence.
To create an accurate analysis, the company’s founding team and leaders need to play an important role. If you’re starting or running a business on your own. Creating a SWOT analysis will provide you many insights into your business prospects. An efficient report helps you to stay unique compared to your competitors and stay ahead of the race.
Why must you do a SWOT Analysis?
As discussed by many industry leaders, execution is the key to success. Having a great idea is a stepping stone and is the beginning of your journey but executing and proving yourself is the real challenge. Gary Vaynerchuck, a best-selling author and the CEO of VaynerMedia, a leading digital advertisement company once, said: “Execution is the game.” To have operational efficiency and achieve the best results, you must understand your business in and out. Let us discuss a few reasons why I think you must do a SWOT analysis.
- Efficient utilization of the resources. It allows you to understand the needs and requirements of the business and allocate the resources accordingly. The resources can be labour or capital.
- Helps you to assess and improve operations. Learning from past experiences and converting past struggles into opportunities is the dream for every business. Understanding your past performances assist you in planning for the future and optimize your operations. Any previous hiccups along the road should be considered and converted into an opportunity.
- Discovering new opportunities and creating strategies. It allows you to plan ahead and establish the vision of your company. There will always be new technology or business like Uber or Instagram. Even if you don’t have that, a look into your organization’s future will let you draw your future predictions and help you set your action plan.
- Helps in forecasting risk. A homerun for any business is a dream, and in most cases, it stays as a dream. If it’s a business, then a few roadblocks and barriers are expected to happen. You must try to forecast the future risks that might arise from the availability of raw materials to government policies. Planning ahead keeps you with back up strategies, just in case an unexpected situation arises.
How to do a SWOT analysis?
For the best results, it’s best to involve a group of individuals involved in your business from the different departments. Hold a brainstorming section for all the major four heads and collect the opinion of the people involved. If you are a small firm with limited employees or departments or a new business, then discuss with your friends and potential customers. Let’s now discuss the SWOT analysis components in detail.
Strengths are the things which you are really good at or expect to perform well and keeps you apart from the competitors. They are the key factors that would lead to the success of your business. Ask yourself all the questions that make you better than the rest. What assets you have in your team must be considered for an existing company. Identify your Unique Selling Proposition (USPs) and add this to the strengths. You must also think from your competitor’s and the customer’s side to understand your strengths. Anything can only be considered as a strength if it provides you a clear advantage over your competitors. For example, if your competitors offer high-quality products. Then high-quality products are not a strength but, instead, it becomes a necessity.
This is the part where you have to be honest, and you must strive to find things holding or might hold you back. Do this process with a clear mind and try to find the maximum number of weaknesses. The more you know, it provides you with an opportunity to rectify those and grow. Think about what you could improve and the sort of practices you should avoid. Just like how you found out why you are better, you must also evaluate why your competitors are better than your business.
They are external factors that might lead to the growth and prosperity of your business. Opportunities arise with the changes in the market you serve, technological upgrades, political reasons, or sometimes some random reasons. You must be able to spot and forecast such opportunities and exploit them to be successful. These small factors would help your business to gain a significant advantage over your competitors in the market.
Threats include anything that can negatively affect your business from the outside. They maybe supply chain problems, logistics, a shift in consumer behaviour, shortage of recruits, and any other factors. You must anticipate the threats and prepare remedial actions to either stop or overcome the incoming problem. Think about all the factors that might lead your sales down and prevent your growth. Check whether your organization is exposed to external challenges or any internal issues that might arise within. Ensure you deal with any internal challenges that occur because any internal issue can drastically affect your business.
Few questions to be considered while preparing the SWOT analysis.
- What is the unique value proposition of your business?
- What internal resources do you have?
- Do you have good research and development capabilities?
- How flexible is your business to cope with change?
- What are the things where your business needs to be more challenging?
- Which processes need improvement?
- Is your location ideal for your business?
- What are the present opportunities in the market?
- Do you expect growth in the market or demand?
- Do you expect any policy change that might benefit you?
- Who are your existing or potential competitors challenging you?
- What factors which you cannot control would put your business at risk?
- What are the possible situations that might threaten your growth?
- Do you expect any customer buying behaviour changes?
- Are there market trends that could affect your business?
Understanding these factors and finding solutions is the hurdle that stands between you and your path towards success. I urge you to take the effort and time and perform the SWOT analysis and, it will provide you more insights about your business and your market. The more you know about your business, gives you further insights you require to launch successfully. Have a look at this SWOT analysis for reference.