An acronym standing for Strengths, Weaknesses, Opportunities, and Threats, a SWOT Analysis is designed to help you analyze your company’s capabilities against the realities of your business environment. Doing so allows you to direct your business toward areas where your abilities are the strongest and your opportunities are abundant. It also allows you to develop short and long-term strategies for your business. A well-developed SWOT analysis will:
- capture business opportunities by capitalizing on business strengths
- overcome weaknesses to take advantage of business opportunities
- monitor potentially threatening outside forces while maintaining or developing internal strength response capabilities
- eliminate weaknesses to protect your business from threats
Writing a SWOT Analysis
When writing your SWOT Analysis, we recommend involving employees with different perspectives and stakes in your company, for example, management, sales, customer service, and customers.
To write a SWOT Analysis for a business plan, we recommend following these four steps. You can use a four-square SWOT Analysis template, or if more manageable, you can make lists for each category.
Example of a four-square template:
After you’ve gathered the right group of employees together, brainstorm your company’s strengths and weaknesses and its opportunities and threats, first individually and then collectively.
Strengths and weaknesses are internal to your company and can change over time with work. Examples of internal factors include:
- Company culture
- Company image
- Operational efficiency
- Operational capacity
- Brand awareness
- Market share
- Financial resources
- Key staff
- Organizational structure
Opportunities and threats are external, happening whether you want them to or not, and can’t be changed. Examples of external factors include:
- Societal changes
- Economic environment
- Government regulations
- Market trends
Strengths refer to the positive, tangible and intangible attributes internal to your company that are within your control.
To help you determine what your company’s strengths are, ask yourself:
- What does the company do well?
- What internal resources do we have? Consider:
- The positive attributes of your employees (knowledge, background, education, credentials, network, reputation, or skills)
- The tangible assets of the company (capital, credit, existing customers or distribution channels, patents, or technology)
- What advantages does the company have over our competitors?
- Do we have strong research and development capabilities? What about manufacturing facilities?
- What other positive aspects, internal to the business, add value or offer us a competitive advantage?
Any aspect of your business that detracts from the value you offer or places you at a competitive disadvantage is a weakness. To determine your company’s weaknesses, ask yourself these questions:
- What factors detract from a competitive edge?
- To accomplish my objectives or compete with my strongest competitor, what areas need to improve?
- What does the business lack? Is it expertise? Maybe it’s access to skills or technology?
- Does the company have limited resources?
- Is my business in a poor location?
Opportunities are attractive external factors that denote reasons your business is likely to thrive. To identify your business opportunities, ask yourself:
- What opportunities are there in my market or my environment that I can benefit from?
- Does my business have a positive perception?
- Has my market recently grown, or have there been other changes that have created an opportunity?
- Is this opportunity ongoing or time-limited? How critical is my timing?
Any external factor beyond your control that could place your strategy, or the business itself, at risk is a threat. Although you have no control over threats, you can benefit by having a contingency plan to address them if and when they occur. To identify threats, ask yourself:
- Who are my existing or potential competitors?
- What factors beyond my control could place my business at risk?
- Are there challenges created by an unfavourable trend or development that could lead to declining revenues or profits?
- What situations could threaten my marketing efforts?
- Have supplier prices or the availability of raw materials significantly changed?
- Are there any shifts in consumer behaviour, the economy, or government regulations that could reduce my sales?
- Are any of my products, equipment, or services obsolete due to the introduction of a new product or technology in the market?
Once you’ve brainstormed your lists of strengths, weaknesses, opportunities, and threats, we recommend ranking them through a voting process. At the end of this process, you should have a prioritized list of ideas, with one person, usually the CEO, having the final call on priority.
Divide your strengths into two groups:
- Group 1: Strengths that can help you take advantage of opportunities facing your business.
- Group 2: Strengths that can help you head off potential threats.
Divide your weaknesses into two groups:
- Group 1: Weaknesses that require improvement before you can take advantage of opportunities.
- Group 2: Weaknesses that you need to completely and quickly overhaul and convert into strengths to avert potential threats to your business.
Continually refer to your lists as you make decisions that contribute to your business, including developing strategies and actions for capitalizing on opportunities. Questions that can guide your decision making include:
- Do strengths open any opportunities?
- How can we convert weaknesses to strengths?
- What do we have to do to take advantage of opportunities?
- How can we best neutralize threats?
SWOT Analysis For a Business Plan Conclusion
Once you have finalized your SWOT Analysis and added it to your business plan, don’t just leave it and forget it. A SWOT Analysis is a crucial element in any business plan and should be revisited regularly, at least annually.
Suppose your business is facing significant changes in the marketplace or competitive conditions, experiencing growth problems, or failing to meet goals. In that case, you may want to revisit your SWOT Analysis more frequently.
It should reflect the world around you as it is, not the way it was. It’s an invaluable tool for leveraging your company’s strengths, minimizing threats, taking advantage of available opportunities, strategic planning, and determining company objectives.
At Bsbcon, we are available to provide support and guidance with your company’s SWOT Analysis, ensuring that it reflects the current state of your business and considers all factors needed to ensure your business’s short and long-term goals and successes. Once your SWOT Analysis is complete, we will work with you to incorporate it seamlessly into your business plan.
Each of our business plans are tailor-made (no templates or plugins!) and designed to be easily implementable in practice. We have business plans for bank loans, investors, strategic purposes, immigration, and more.
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