How to create a SWOT Analysis for your business
What is a SWOT Analysis?
We're big fans of a SWOT Analysis at Sharp Thinking. It is a default part of our marketing methodology when developing a strategy for a business.
A SWOT analysis is a compilation of your company's strengths, weaknesses, opportunities and threats. The strengths and weaknesses refer to internal factors, which are the resources and experience readily available to you, whilst the opportunities and threats are external factors so typically things you and your business can’t control.
Why use a SWOT?
A SWOT Analysis is a planning process that helps a business overcome challenges. It helps you to take a step back and see what you need to get better at, as well as plan for the future.
Created 60 years ago by Albert Humphrey, it was used to identify why corporate planning consistently failed. Since its creation, SWOT has become one of the most useful tools for business owners to start and grow their companies. And is one of our favourite and most used planning tools at Sharp Thinking too.
A SWOT is an ideal way to get a bird's eye view of your business. It is a good exercise to complete at the end of a year or business quarter before committing to any new plans.
How to prepare a SWOT
If you haven’t done a SWOT Analysis before, don’t worry, it’s super easy. It involves very little research and with you being the expert in your own business, you are best placed to complete it. All the answers should come naturally to you. But it can also be well worth getting your staff involved too.
Work through each section of the framework in turn to build a SWOT analysis of your business.
1. What are your Strengths?
These are the things you are great at. Those things you do like no one else in your industry. Everything that comes easy to you and you excel at. Ask yourself the questions: What do I/we do better than anybody else? What do our customers always praise us for? What comes easy to the business?
Think internally at your operations and products and services and start to identify the key factors that make your business great. Look back to previous achievements where you might have exceeded expectations and really wowed yourself. Drill down into the root causes that influenced this success.
Be specific in your identification. These are the elements of your business that you want to place a focus on maintaining, replicating and exploiting going forward.
2. What are your Weaknesses?
This part is less fun, yet equally, if not more, important. Look at what your business doesn't do so well. Where is there room for improvement? What do you need to do better at?
No doubt you have ideas about this already. You look at competitors and think 'I should be doing that' or 'why can't I do that as well. These are good starting points. Have a look at our competitor audit blog for more guidance.
Look back to times where you’ve struggled to meet targets and think about why that happened. An easy way to get you thinking at this section is to look at the inverse of the strengths section.
Begin to write down your weaknesses as you see them but be careful to make sure they’re elements you have the power to change. Your weaknesses should be areas you can control.
This section is the starting point for an improvement roadmap. Your goal here should be to put steps in place for your business to be performing at the best standard you know to be achievable.
3. What are your Opportunities?
This is the first section that might involve some research, or perhaps you already know what your opportunities are. Maybe you already have a plan to capitalise on these. If so, great, write them down. If not, this is the part where you look externally at your business environment and understand where you could take advantage.
Is there an unserved market you could tap into? Could you diversify and create new products or services? Could you reach a wider audience, perhaps geographically or look at new segments?
Look back at your internal strengths and weaknesses to find opportunities where room for improvement could translate into increased sales.
Having a good flow of opportunities protects the business from stagnation and can create diversification supporting long-term growth. For more ideas read our blog 5 ways to keep ahead of your competitors.
Opportunities may be long or short term, complicated or wonderfully simple. Use this section to create a time-line or plan of action for actualising any available opening in the market
4. What are the Threats?
Finally, you need to identify your threats. These can be a multitude of factors, mainly external, that could harm your business. They could come in the form of an emerging competitor to the market, or an existing competitor that is offering bigger, better product offering. It could be market forces, such as economic changes locally or globally, legislation or licensing rule changes. Brexit has been a common one for many businesses as is the pandemic.
Think about things that ‘could’ realistically happen that may not have happened yet, and what you might do in these scenarios.
Many of the things in this section will be out of your control. However, being aware of these potential problems puts you in a position to manage your response. Being aware of these challenges ahead of your competition puts you in a position of power.
Having a good handle on your threats allows you to establish contingency plans which, again, protects your business against failure and establishes a long-term vision for the future.
And to summarise
Once you’ve worked through each section you will have seen how each section influences its three counterparts, and how all areas are interlinked.
You should have a really good view of where your business stands and an idea about what the future might hold. A future in which you turn your weaknesses into opportunities, and where your foresight and forward planning protect you against external forces out of your control.
Over time you’ll see how your SWOT changes and flows and you’ll be able to use this process to solve specific goals you’re looking to achieve. Using your SWOT to generate an action plan to mitigate any internal or external negative forces at play.
We’re huge fans of SWOT at Sharp Thinking and always use it as part of the planning process – in fact, we not only use it for clients but to aid business planning for Sharp Thinking too. So give it a go. We would love to hear how you get on with yours, get in touch and let us know.
Have a look at our client case studies to see how we've used SWOT to help develop a marketing strategy and plan for different including a construction business and mentored for a kids interior magazine.