How to do a SWOT analysis for your business

October 2021
 

We look at how to do a SWOT analysis that benefits your business. 

What is a SWOT analysis?

A SWOT analysis is a strategic planning technique used to identify the strengths, weaknesses, opportunities, and threats to your business. Working through a SWOT analysis template will help you to effectively evaluate a new project, a specific target, or your business as a whole.

Strengths and weaknesses are internal characteristics of your company that are happening right now. They’re essentially things you can control, like products, staff, company culture, reputation, and intellectual property.

Opportunities and threats are external factors which are usually out of your control and in the future. Examples include government regulation, the economy, and competitors.

A SWOT analysis can set you up with a roadmap for how you should proceed. It ensures you’re ready for challenges and aren’t missing out on key opportunities.

When should you do a SWOT analysis?

Generally, an annual SWOT analysis is a good way to ensure your business is on track or check if it needs to take a different direction.

However, a SWOT analysis can also be useful at other times. For example:

• When you’re reviewing your marketing strategy and budget

• As part of a business plan

• If you’re raising finance

How to do a SWOT analysis

1. Involve a group of people

A SWOT analysis is a group exercise. Founders and senior-level employees are important participants, but other employees should be involved too. This will give you a wider picture of your business and ensure staff buy-in if the strategy changes as a result.

You might also consider bringing in external consultants and key trusted customers and partners.

2. Brainstorm ideas

Get everyone in a room and encourage people to write their ideas on post-it notes.

Don’t be judgmental about suggestions – honesty is important. Threats and weaknesses are often harder to come up with than strengths and opportunities. Remember that difficult issues might arise as weaknesses, like the poor performance of managers or lack of communication from leadership.

If you’re feeling nervous about discussing your weaknesses, try not to be. It can be helpful to identify your strengths and try to channel your weaknesses as positively as possible.

A SWOT analysis template like the one below is recommended to record the group’s thoughts.

Useful SWOT analysis examples

To give you an idea of what to include, we look at example questions to ask in each stage of the SWOT analysis.

Strengths

Your strengths are the things that your business does well. They give you an advantage over your competitors.

Think about your strengths from the point of view of people in your business but try to step into the shoes of your customers and competitors too. Work out what they would perceive as your strengths.

Examples of questions to ask in your SWOT analysis include:

• What does your business do well?

• How do satisfied customers describe your business?

• Do you have an effective website and social media presence?

• Do you have great staff and culture internally?

• Do you have a good relationship with suppliers?

• Are you constantly innovating?

• Do you have a positive cashflow and strong balance sheet?

Weaknesses

A SWOT analysis of your company can identify the things that hold it back from achieving its full potential. You might already know lots of them, but maybe they’ve been ignored in the past. Try to be honest and realistic.

Like your strengths, consider your weaknesses from an internal and external perspective.

Questions include:

• What does your business do badly?

• What common complaints do customers raise?

• What do competitors do better than you?

• Is employee morale low in certain departments?

• Are you lacking funds to invest in new products or services?

• Do you rely too much on a set group of customers?

• Do you have poor cashflow management? 

Opportunities

The opportunities section is about identifying markets, trends, or areas of the business you’re not taking full advantage of. 

Opportunities could come from:

• Economic conditions

• Changes in regulations

• The decline or closure of competitors

• New technology that improves processes or creates new innovation

• New customer trends that create demand for your business

• Better supplier agreements

• Recruitment of skilled employees

Threats

Threats to your business can range from minor risks to something monumental.

Examples of threats in your SWOT analysis could include:

• Economic conditions

• The loss of a key customer

• Employees leaving the business creating a skills gap

• Increased prices by suppliers

• Decline in market size

• Changes in regulation that impact the appeal of your product or service

• Loss of finance or increased charges

• Legal problems

What to do after a SWOT analysis

1. Decide your priorities

What you do after a SWOT analysis is vital to ensuring that the whole exercise wasn’t a waste of time.

You’ll no doubt have a very big list, but you’ll likely notice common suggestions. These will highlight some of the most important areas you need to focus on.

For example, customer service might crop up in three of your lists:

• Weakness: Customers regularly complain that customer service is slow to respond

• Opportunities: Your business could improve retention by expanding the customer service department

• Threats: If customers think service is poor, they might go elsewhere

Try to group common suggestions together and settle on a short list of top priorities in each section.

2. Form a strategy

Once you’ve settled on the final list from your SWOT analysis, create a plan for how to boost your strengths and opportunities and tackle your weaknesses and threats.

You’ll need to decide which weaknesses must be addressed first. Some weaknesses will have an immediate solution, such as recruiting new staff. However, others will require a more long-term plan of action.

Decide how the identified threats should be dealt with. You could improve processes, recruit new staff, stop an overreliance on a set group of customers or bring in external advisers.

If strong opportunities have been identified, plan how you are going to embrace them and identify who in the business needs to be part of it.

Get it right and your weaknesses can be turned into strengths. By taking advantage of the opportunities, you can eliminate some threats.

How to do an effective SWOT analysis

A SWOT analysis identifies your company’s strengths, weaknesses, opportunities, and threats.

The SWOT analysis process

• Bring together senior people and other relevant employees

• Consider inviting external consultants

• Consider inviting trusted partners and customers

• Allow honesty and don’t be judgmental

• Use a SWOT analysis template

• Decide the most important issues in each section

• Create a strategy for maximising your strengths and opportunities

• Form a plan for tackling your weaknesses and threats