For decades, the SWOT analysis has been used to direct businesses successfully. If you’re new to running your own business, this article shows what a SWOT analysis is and how it can help you.
SWOT is an acronym for strengths, weaknesses, opportunities, and threats. The technique is a simple way to identify the positives and negatives inside and outside your company. SWOT is helpful for visual learners and thinkers. Standard practice is to create a four-quadrant square to denote where aspects of each item belong instead of writing up the analysis in a bland document file.
Pieces of SWOT
Time to briefly break down each piece of the process:
- Strengths: List what advantages you have internally as a company. What would an outsider say are your core unique selling propositions? What are the benefits that you have over the competition? What resources are at your disposal? These items are your strengths.
- Weaknesses: Honestly assess the vulnerabilities in your armor. Are you currently understaffed? Are you low on funds? Don’t hold back on acknowledging every weakness you have. The perspective of a consultant or mentor helps you be objective when determining weaknesses.
- Opportunities: Research the market well to understand where your opportunities lie. These are factors outside your organization that work in your favor. Is there a likely change in the tax law or other legislation that will benefit you? Are there social trends and newsworthy items that cast you in a favorable light? Identify your prime external opportunities.
- Threats: Threats are the external dangers to your business, the opposite of your opportunities. Will specific laws make business operations more difficult? Is there lousy press or aggressive competition to overcome? You must know your threats, so they don’t overtake you.
Benefits of SWOT
SWOT allows you to assess your current status. If you do not know where you sit in the market, you significantly reduce your odds of success. You can’t know how to get where you want to go until you know where you are. SWOT helps you locate your position in your business road map. Once you know where you are, you can set appropriate goals. You won’t aim for unrealistic objectives, nor will you aim too low. SWOT helps you guide your next steps.
If your business isn’t growing, it’s dying. A SWOT analysis is not too difficult to put together, so create one in your firm this week. Then implement the lessons learned to assure progressive growth.
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