The point of a SWOT analysis is to help you develop a strong business strategy by making sure you’ve considered all of your business’s strengths and weaknesses, as well as the opportunities and threats it faces in the marketplace.
As you might have guessed from that last sentence, S.W.O.T. is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is an organized list of your business’s greatest strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal to the company (think: reputation, patents, location). You can change them over time but not without some work. Opportunities and threats are external (think: suppliers, competitors, prices)—they are out there in the market, happening whether you like it or not. You can’t change them.
Existing businesses can use a SWOT analysis, at any time, to assess a changing environment and respond proactively. In fact, I recommend conducting a strategy review meeting at least once a year that begins with a SWOT analysis.
New businesses should use a SWOT analysis as a part of their planning process. There is no “one size fits all” plan for your business, and thinking about your new business in terms of its unique “SWOTs” will put you on the right track right away, and save you from a lot of headaches later on.
How to Conduct a SWOT Analysis To get the most complete, objective results, a SWOT analysis is best conducted by a group of people with different perspectives and stakes in your company. Management, sales, customer service, and even customers can all contribute valid insight. Moreover, the SWOT analysis process is an opportunity to bring your team together and encourage their participation in and adherence to your company’s resulting strategy. A SWOT analysis is typically conducted using a four-square SWOT analysis template, but you could also just make a list for each category. Use the method that makes it easiest for you to organize and understand the results. I recommend holding a brainstorming session to identify the factors in each of the four categories. Alternatively, you could ask team members to individually complete a SWOT analysis template, and then meet to discuss and compile the results. As you work through each category, don’t be too concerned about elaborating at first; bullet points may be the best way to begin. Just capture the factors you believe are relevant in each of the four areas.
Once you are finished brainstorming, create a final, prioritized version of your SWOT analysis, listing the factors in each category in order from highest priority at the top to lowest priority at the bottom. Questions to Ask During a SWOT Analysis I’ve compiled some questions below to help you develop each section of your SWOT analysis. There are certainly other questions you could ask; these are just meant to get you started.
Strengths (internal, positive factors) Strengths describe the positive attributes, tangible and intangible, internal to your organization. They are within your control.
Weaknesses (internal, negative factors) Weaknesses are aspects of your business that detract from the value you offer or place you at a competitive disadvantage. You need to enhance these areas in order to compete with your best competitor.
Opportunities (external, positive factors) Opportunities are external attractive factors that represent reasons your business is likely to prosper.
Threats (external, negative factors) Threats include external factors beyond your control that could place your strategy, or the business itself, at risk. You have no control over these, but you may benefit by having contingency plans to address them if they should occur.
Example of a SWOT Analysis For illustration, here’s a brief SWOT example from a hypothetical, medium-sized health care organization: