SWOT analysis SwOT which stands for strengths, weaknesses, opportunities, and threats is a tool for planning, especially strategic planning for your company. Follow these four easy steps to make a SWOT analysis for your small business. The goal is to assess your strengths and weaknesses as your internal elements and opportunities and threats as external elements.
So, you can use SWOT analysis to evaluate Strengths and Weaknesses as the internal elements, and Opportunities, and Threats as external elements of your business. SWOT analysis can have a broad range of applications.
How to Do a SWOT Analysis for Your Small Business.
Often I have seen how SWOT analysis begins and ends with the SWOT matrix. The SWOT matrix is the quadrant in which you list all SWOT elements. In such away, you cannot achieve the full benefits from this analysis. For example, you create the matrix, and it looks perfect. But, the question is what you need to do next to improve your business.
As you can see, you will need to do something after you develop the SWOT matrix. So, you will need action steps. But, the action steps are the results of strategies, not the matrix.
According to this logic, the result of your SWOT analysis will need to be strategies with appropriate action steps to achieve the goals covered with each of the strategies from the analysis.
SWOT Analysis Step #1: Scanning External and Internal Environment.
The purpose of this step is to find all internal and external factors that affect your work. You can list your strengths and weaknesses as internal factors and all your opportunities and threats as external factors.
As an organizational system, you are not alone in every aspect of your work. You have your business’ external and internal environment. The SWOT analysis will always begin by evaluating the current situation in respect of the internal and external environment of the company.
This evaluation of the current situation will lead to identifying internal and external factors that can influence your company. The internal factors can be strengths, but some of them can be a particular type of weakness of your small business. On the other side, the external factors can be opportunities or threats to your small business from outside. In this section, you will need to find all factors and list them according to the importance of your company. I will explain these elements of the SWOT analysis.
Strengths, Weakness, Opportunities and Threats.
The purpose of this step is to find all internal and external factors that affect your work. You can list your strengths and weaknesses as internal factors and all your opportunities and threats as external factors. Strengths are all things that your company does very well. They are something that you do, and you are the best at it, something that differentiates you from the competition. Also, everyone has some weaknesses. Like strengths, weaknesses are internal characteristics of your business that can cover your team members, resources, procedures you are using, competencies, etc.
On the other side, you have opportunities that come from outside of your organization. These opportunities are chances that will happen something positive for your small business.
SWOT Analysis Step #2: Internal and External Analysis.
In this step, you will need to analyze the internal and external environmental factors that influence your company. The purpose here is to decide whether an internal factor is the strength or weakness of your business and whether an external factor is an opportunity or threat for your company.
Questions Related to Internal and External Analysis.
The questions that you will need to answer here are following:
1. Which legal factors are your opportunity and, which of them are threats to your business?
2. Which environmental factors are your opportunity, and which of them are threats?
3. Which political factors are your opportunity and, which of them are your threats?
4. Which economic factors is your opportunity and, which of them is your threat?
5. Which social factors is your opportunity and, which of them is your threat?
SWOT Analysis Step #3: Construct the SWOT Matrix.
Until now, you have already listed all influential factors from inside and outside your company. Also, you classify them as strengths, weaknesses, opportunities, and threats. Now you can continue with the construction of your SWOT matrix.
SWOT analysis matrix is a single quadrant constructed from SWOT acronyms, and in each quadrant, you need to place each of them already identified factors. This is an excellent graphic presentation of what is right and wrong in your company and what you can expect as an opportunity or threat.
SWOT Analysis Step #4: Define SWOT Strategies.
What’s next? Is this enough to conduct the SWOT analysis? You need to know when you are analyzing that you need to expect future directions for the next actions at the end of the process.