A SWOT analysis is a business tool which helps you to understand the strengths, weaknesses, opportunities and threats for your business. It’s a valuable planning tool to give you better insights into your company.
Although it’s a really useful tool, many small business owners don’t have use it as they don’t know where to start. We’re here to answer the common questions that people have about doing a SWOT analysis.
What are the benefits of a SWOT analysis?
A SWOT analysis can help you to:
• Understand of the market and your competitors
• Spot changes that may affect your business before they happen
• See ways to grow or reach new customers
• Capture what’s great about your business great – this can be used in your marketing messages
When should I do a SWOT analysis?
If you have a new business, a SWOT analysis can help with the initial planning to help you understand the market and your potential position within it. It can also identify risks and help you to mitigate against them.
For more established businesses, a SWOT analysis can be used to assess a new market opportunity, to respond to a changing environment or even as part of an annual review of the business.
How long will it take?
That depends. If you know your business, your competitors and the marketplace really well, then it may only take an hour or so. But if you want to spend time researching the political, technological and social environment that affects your business, or do some mystery shopping of your competitors, then it may take longer.
But don’t worry – even if you don’t have time for in-depth research, a SWOT analysis can still provide you with insights into your business.
Who should be involved?
That’s up to you. You can either do it yourself or involve other people in the business. You can even go out to some of your customers to get their input. Just decide what would work best for your business.
What should I include in each section of the SWOT analysis?
• What does your business do well?
• What do you offer that other people don’t?
• Are your prices more competitive?
• What factors (that are within your control) stop people buying from you?
• What needs to be improved?
• Do you have any specific challenges (e.g. cash flow, location, reputation)?
• What external factors are happening that could bring in more customers?
• Is there new legislation, technology or changes to the way people live that could have a positive effect on your business?
• Is there new legislation, technology or changes to the way people live that could have a negative effect on your business?
• Is competition growing?
• Are your costs rising due to increased costs of materials, fuel, transport, etc?
Try to be as specific as possible. For example, rather than saying one of your strengths is “Good value for money”, try to say how much cheaper you are (e.g. “10% cheaper than competitors). Using actual figures allow you to get a real sense of how much difference you offer – and, if appropriate, you can use these figures in your marketing too.
What should I do with the results?
Once you know how your company is positioned, you can use the information to plan for the future. For example, you could offer new products in response to changing customer behaviour, or you could change your marketing and advertising to explain more about the strengths of your business.
Your SWOT analysis helps you prepare for the future. It puts your business in a strong position to take advantage of opportunities, adapt to changes or identify opportunities to reach out to new customers.