SWOT Analysis

A SWOT analysis (pronounced swät as in what you do to a fly, not swoat that rhymes with goat) is a high-level way to assess where your business stands, and where it needs to go.

The analysis asks you to list your businesses Strengths, Weaknesses, Opportunities, and Threats, and use that list to make changes and set priorities. Typically the Strengths and Weaknesses boxes represent internal factors within the control of your business, and the Opportunities and Threats boxes represent the external environment (marketplace or competitors) over which you have no direct control.

To begin, take a large blank piece of paper and draw the SWOT quadrant diagram:

1. Strengths: What gives your business a competitive advantage?

A process patent
A unique product
Your management team
Innovative problem solving
Majority market share
A strong brand

2. Weaknesses: What makes your business vulnerable?

A weak brand
Bad PR
Product line gaps
Inefficient systems
Limited capital
Poor morale

3. Opportunities: What external market conditions can help your business grow?

A product failure by a competitor
A new market niche
A process improvement
A new fad
An unmet customer need
A star employee leaving a competitor that you can hire

4. Threats: What external market conditions could hurt your business?

New government regulations
A competing product line
A natural disaster
Expiring patents
Employee poaching
A disruptive technology

Once you’ve completed the grid, use it to formulate a business plan of action:

Use your strengths to determine how to overcome threats
Address your weaknesses to take advantage of opportunities
By taking advantage of an opportunity, enhance or add to your strengths
That new strength should eliminate or alleviate a threat.

To learn more about SWOT analyses:

Check out an in-depth discussion of performing a SWOT Analysis

The SWOT Index—a beginner and an advanced approach to SWOT analysis
(http://cbae.nmsu.edu/~dboje/sbc/pages/page3.html)