How to Do a SWOT Analysis for Your Business
You can be a seasoned company with an established business plan, or you can just be starting out and still in the process of creating your website. Either way, identifying and understanding your competitors is a crucial component of any business strategy.
If you’re just starting your business, begin by performing market research on your competitors. Then, after you’ve been around for long enough to have a few successes and failures of your own, you’re going to want to take your competitor research efforts up a notch. This is where a SWOT analysis comes into play.
A SWOT analysis is useful for making improvements and keeping your marketing goals on the right track. In this guide, we’ll explain what this method is all about and how to do a SWOT analysis for your own venture.
What is a SWOT Analysis?
A SWOT analysis is a strategy used by businesses for measuring and evaluating their overall performance, and that of competitors, in an objective manner.
SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. All of these components are reviewed and assessed for each organization, including both their competitors and themselves.
The first two parameters, strengths and weaknesses, involve internal factors such as your reputation, team, location and intellectual property. These are not necessarily permanent. It’s within an organization's own control to keep or change them (which can happen for the better or the worse). So, assuming you want to make a positive change, you’re going to need to put forth the effort and time to see that happen.
Opportunities and threats are related to external influences such as competitors, market trends, and prices of materials. Unfortunately these are not within an organization’s control, and therefore you are not able to change them. However, an organization should learn how to work with these factors to their advantage, and also adapt their strategies accordingly in order to compete with others in the field.
A SWOT analysis is a lengthy process used particularly for making big decisions, such as if a venture is looking to grow into a new field or rebrand itself. It can help businesses draw conclusions by enabling them to see the bigger picture clearly, and then formulate a clever plan accordingly.
So without further ado, let’s begin.
How to Do a SWOT Analysis
Before you get started, assemble your partners for one of the most effective meetings you’ll host yet. Conduct a brainstorming session in order to get the best results from this activity. Hearing multiple opinions will enrich the discussion and the insights you'll gather.
Below we’ll walk through the stages of how to do a SWOT analysis for reviewing both your own company and competitors. For each one, grab a white board, sheet of paper, or another note-taking device. On this, create four sections for each company you’ll analyze. Label the sections with these parts: strengths, weaknesses, opportunities, and threats. Then you can get started.
Side note: When it comes to this analysis, especially for your own business, leave out the bias. The more honest you are, the better and more useful your results will be.
Here are the five steps to follow on how to do a SWOT analysis:
Draw conclusions and make a plan
01. Analyze strengths
Strengths are the big things that a particular company is doing well, which gives them a competitive advantage in their industry and benefits their customers. For your own business, identifying your strengths can help you leverage these by making them stronger.
For competitors, consider their strengths a goal to aim for. Ask yourself, ‘How can I do what they do, but better?’ or ‘How can I create my own twist on this idea that outsmarts theirs?’ Here are a few examples of questions to analyze:
What is this company’s competitive advantages in the industry?
What features do they offer that are unique and valuable?
What processes are they excelling in?
What draws customers in?
Are they a market leader? If so, how did they get here?
Is the organization expanding and hiring new employees?
What strong assets does the company have, i.e., intellectual property, stakeholders, buildings, etc.?
02. Analyze weaknesses
These are the aspects of an organization that could use some improvement. Here it’s important to be honest with yourself, especially for your own business. It might be a bit uncomfortable at first, but if you don’t draw attention to a weakness, there won’t be room for you to improve it.
Note that many of the points you analyzed from the strengths above can be addressed in this section as well, but with a reverse meaning. For example, a strength might be ‘expanding their business and hiring new people,’ while a weakness could be ‘losing employees to competition.’ So consider those as options in addition to these kinds of questions:
What could this company do better?
What processes could be improved?
Is this company lacking an established reputation?
What is this company struggling with compared to others in the industry?
What do customers often complain about?
Is the organization losing employees?
What assets is the company lacking, from patents to funding to employee positions and more?
03. Analyze opportunities
Owning a business is all about seizing the moment. Opportunities are probably the same for yourself and your competition, if not very similar. Recognizing them is the first step, and taking advantage of them before your competition does is the second. Likewise, you should do so at the determined time that makes the most sense for your business, depending on what stage of development you’re in. Here are some questions to consider:
What is the latest trend, such as a green initiative to use recycled packaging or working with social media influencers for promotion?
What are some upcoming events to take advantage of, such as a trade show, holiday or recent news release?
Is there a loophole in your market, such as a cheaper supplier or opportunity to eliminate the middleman?
Is there an opportunity to expand to a larger building or better location?
Could the business be sold soon? Or on the other hand, could this business buy smaller, local businesses to expand?
04. Analyze threats
These are external factors which can affect a business in a negative way. And just like opportunities, threats are often similar for both you and your competitors. However, some threats can be individual to an organization, such as a particularly bad PR scandal from an unhappy customer. It’s extremely important to learn how to mitigate these, and prevent them from turning into larger issues in the future.
Side note: Although threats come last in the SWOT analysis, it might be a good idea to address them first. Like a small fire, if you don’t act quickly, threats can sometimes cause irreplaceable damage.
Here are examples of potential threats:
Is a customer expressly unhappy with a particular product or service?
Is the market fluctuating, i.e., are prices rising, are consumers purchasing alternatives, etc.?
Are their new government regulations to watch out for?
Who are some of the new competitors entering the market and what is it that they are doing better?
Will new technology become available in the near future that could make this business’s products or services obsolete?
Are consumers no longer expressing interest in these services?
Draw conclusions and make a plan
Now that you’ve laid out the most important components affecting the success of your organization and your competition, you have the tools you need to develop a strategy. This strategy will guide you to make improvements in your company, and compete on a level playground with your competition.
Consider these five steps in working through your plan:
Get feedback on your own SWOT analysis from your employees and other relevant stakeholders.
Draw out a plan, which involves using your strengths to counteract your weaknesses, as well as finding opportunities through your threats. If you’re a new business, write out these ideas as a part of your business plan for a specific period of time (i.e., annually, quarterly, or monthly).
Communicate your ideas to your team members, making sure that everyone is on board and held accountable.
Prioritize your action items, starting with the most important factors first. (Perhaps these are your threats if they are urgent matters.)
Execute your plan. Introduce the plan in the format of listed action items for your team, making sure to assign a designated person for each topic.
In summary, know that this is just a snapshot of a moment in time. Many of these factors are subject to change at a later date. It’s a good idea to come back to this exercise in the future after executing your plan and seeing it through in order to assess where your business stands in your competitive industry and how far along you came.
By Jennifer Kaplan
Small Business Expert & Writer