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Creating a SWOT analysis marks a huge milestone in launching a business.
Having it done gives you a full overview of your business idea, what will work, what elements need improving and what you should look out for.
SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats.
To describe it as simple as possible, it is a tool that gives you a chance to look at internal (strengths and weaknesses) and external (opportunities and threats) elements of your business.
SWOT analysis allows you to look at your business and figure out what you need to work on, what parts of it you should improve (or modify, even at the concept stage of it) and what potential problems may await for you in the future.
One of the most effective ways to create an analysis is by asking yourself certain questions regarding the four elements of SWOT
This element is all about why you should succeed? In here you have to list all the strengths of your company. Some of the questions you need to answer here are:
In order to succeed in business, you need to be aware of your business’s weaknesses. Any limitation or a resource you are lacking will affect your company’s performance. You need to think what you can improve in the business, what is blocking its development.
This is the part where you have to be brutally honest with yourself.
Answer the following:
The third part outlines the opportunities that you could leverage to grow your business. Maybe there are some emerging trends you could use to your advantage? Or perhaps you are aware of some customer needs that are not being met by your competition?
Lastly, you need to look at any threats to your business. These would be any obstacles on your way to success. These can be actual or even potential, things you are afraid of. Debts, cash-flow, slow sales but also competition, new trends, equipment and many more could pose a serious threat to your company and you need to be fully aware of those.
Some of these questions will be difficult to answer, I know.
Some require you to look at some aspects of the market you possibly wouldn’t like to know about (better competition, your finances, your personal debt that might affect the future of your business and so on). Others might reveal what you don’t know about yourself, or your idea and that is all the point of it.
The important thing to remember when creating your SWOT analysis is that you must be brutally honest.
This is not the time to disguise things, you need to be fully aware of them in order to be able to overcome any obstacles and to better understand the nature and the environment your business will be facing.
The goal for creating a SWOT Analysis is to give yourself a broad overview of your business as well as to identify opportunities and issues in your business.
All this data enables you to do the following:
The best approach to this is by asking yourself such questions as:
Since SWOT analysis is a descriptive exercise, it is easy to stop there and do not implement your findings at all.
But remember that the most important thing here is action.