How to conduct a SWOT analysis

Fine-tuning your business strategy

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02/06/2017

When you’re just starting out, it’s a good idea to conduct a SWOT analysis on the feasibility of your business idea. It’ll help fine-tune your business strategy by examining internal and external factors that may help or hinder your business. Identifying strengths, weaknesses, opportunities, and threats – that’s what SWOT stands for – allows you to understand your business idea more fully and make smarter decisions moving forward.

The SWOT Matrix

SWOT analyses use a simple two by two matrix, but it’s more powerful than it looks. This method will help you to quickly assess the potential of your idea. Each of the four squares represents one of the SWOT factors:

The first row contains the internal factors – strength and weaknesses – which you have some control over and you can work to address.

The second row contains external factors – opportunities and threats – which are beyond your control but you should be aware of.

Now look at the grid’s first column, containing strength and opportunities. Those are both positive factors. The second column lists the issue’s weaknesses and threats, both of which are potentially harmful.

The SWOT Steps

Because you’re just starting out, it’s best to conduct a SWOT analysis on your business idea as a whole. To help make it easier to understand, we’ll use the following steps on a business that’s planning to provide a gardening service.

• Step 1: Define the issue you’re assessing, and enter it in the space above the grid. Be as clear and succinct as you can. The clearer you’ve defined the issue, the more accurate you can be in identifying relevant factors. In this case, it would be “Confirming the feasibility of offering a gardening service in my town or city.
• Step 2: Go through each of the four criteria – strengths, weaknesses, opportunities, and threats – and assess your idea on each one.
  
  • Strengths: confirmation of demand, your own skills and experience as a gardener
  • Weaknesses: first time in business, so no word-of-mouth advertising to help boost credibility and brand awareness
  • Opportunities: the chance to showcase new techniques learned in training
  • Threats: Other gardening businesses in the area.
• Step 3: Look at each square of the grid. Are there any strengths you’re not making the most of, or any weaknesses that could be dealt with? Have you identified opportunities and threats? For example, if you know you have the skills and experience necessary and that you’re using techniques that are new, and might not be in use by the competition, these are strengths and opportunities you can highlight and make the most of.
• Step 4: Repeat frequently. The simplicity of the 2 by 2 grid makes conducting a SWOT analysis something you can do quickly and easily. A good idea is to get friends and family to help you in a brainstorming session when conducting a SWOT analysis, as they’ll often think of things that you haven’t.

Being able to clearly see the strengths, weaknesses, opportunities, and threats of your business and various projects is essential in fine-tuning your strategy. SWOT analyses are a great way to explore potential solutions, identify potential barriers, choose an effective strategy, or revise an existing strategy. Conduct regular SWOT analyses to keep your business on the right track, and whenever you’re faced with a decision.

Advice and resources

• Business website The Balance has a detailed guide on how to conduct a SWOT analysis.
• Smartsheet has free SWOT analysis templates to make the process easier and more accurate.

This blog is not financial advice. The content of the blog is reliable at the time of publishing, but we can’t guarantee it is entirely free from error or omission beyond our knowledge. Links are provided for you to explore, but we have no connection with third party sites or responsibility for their content.