Every business, large or small, should do a SWOT analysis. If you are starting a new business, a SWOT analysis can help you decide on a business model and gain a competitive advantage. It will inform your break-even analysis and give you a more realistic picture of what you are up against. Both of these should be included in your business plan if you need to raise finance.
Existing businesses should conduct a SWOT analysis annually. Think of it as your annual business statement. With it, you can keep your business running smoothly throughout the year, anticipate problems, make necessary changes or improvements, and make more informed decisions. Basically, an annual SWOT analysis will allow you to avoid driving contact with your business, your customers, and your industry.
How to do a SWOT analysis
There is no science to SWOT analysis. There is no objective way to measure how well you are doing. It relies on your observations and ability to recall the internal and external factors that may affect your business. Rather than making accurate predictions, it is more about knowing what to plan for.
Step 1: Create a SWOT analysis matrix
Your first step is to create a SWOT analysis matrix or download a SWOT analysis template. This 2 x 2 matrix has boxes for each area: Strengths, Weaknesses, Opportunities and Threats.
Step 2: Gather the right people
While important business decisions are usually made by the founders and senior staff, there is no such thing as "too many people to make a difference" in a SWOT analysis. Having more input, even from people who don't fully understand your business, can only make it stronger.
You may also find that you are more receptive to the strategic decisions made through the analysis if you involve your employees in the process. Hell, even your customers can provide valuable insights.
Step 3: Conduct a brainstorming session
Once you have assembled your team, conduct a brainstorming session with all relevant people. You can list strengths, weaknesses, opportunities, and threats together (more suitable for smaller teams) or ask participants to create and submit lists individually (more suitable for larger teams).
Step 4: Fill in the gaps
After everyone has racked their brains to come up with a list of the top four, it's time to fill in the gaps that need more explanation. This is your and your team's chance to ask the questions that will determine the importance of each item on the list.
Ask everyone in the group to choose the top three items in each area. It is likely that you will find a pattern that tells you what to focus on.
Even if you're the only one doing the analysis, don't worry! In this case, you will probably cover all parts of the business and have a good insight into what needs to be considered. Open a bottle of wine or make a pot of tea and start working in earnest!
【Source text: by report】