If you’ve been in business for a while or if you follow the corporate world, you’ve probably come across the term SWOT analysis. SWOT analysis is a technique that you can use to examine and evaluate your business or your company and get a better understanding of your position in the industry. Not sure of how to do a SWOT analysis? We can help you out.
What is a SWOT analysis?
Before we dive into how to conduct a SWOT analysis for small businesses, let’s go over what a SWOT analysis is.
SWOT analysis involves identifying your company’s Strengths, Weaknesses, Opportunities and Threats. Here’s what each of those elements means.
Identifying your strengths involves understanding the things your company does exceptionally well.
This can include having a memorable and relatable brand, offering a particular service or product or providing fast customer service.
Related: Big business branding strategies on a small business budget
Weaknesses are areas of your business that need to be improved. This can include changing the organizational structure of your company, not having enough skilled employees, dealing with a limited budget, not standing out from the competition or lack of a clear marketing strategy.
Opportunities are simply possibilities for your company to grow and scale. This can include existing customers asking for a certain product and service that you don’t yet provide or having trouble keeping up with all the leads.
Lastly, threats encompass everything that poses a risk to your company itself or the likelihood of growth. This can include new competitors with cheaper products or services, changes in the economy or laws that affect your business.
With that in mind, it’s worth mentioning that you can perform a SWOT analysis for your business as a whole, a single department or even a single project within a department in your company.
Why is a SWOT analysis important?
There are several reasons why a SWOT analysis is important:
- It allows you to better refine your business and projects so you can better serve your customers and increase your profits.
- A SWOT analysis can help you position your business favorably between you and your competition.
- It makes it easier to come up with a strategic marketing plan and direction, especially in times of economic crisis.
- You can use it to improve smaller areas of your business, be that a department in your company or a specific product, project or service.
Related: 11 steps to create a marketing plan for your business
How to do a SWOT analysis for your small business
Now that we’ve covered what SWOT analysis is and why it matters, let’s go over the steps for performing a SWOT analysis on your business. One of the best ways to perform a SWOT analysis is to ask a series of questions.
For example, to determine what your company strengths are, you could ask the following questions:
- What do your past and current customers or clients love about your offers?
- How are you better than your competition?
- What is your unique selling point?
- What’s available to you that your competitors don’t have in terms of resources?
Once you know what your strengths are, you can use the same approach to identify your weaknesses. Consider the following:
- Which offers performed poorly with your past and current customers?
- What consistently comes up in negative reviews?
- What reasons do your customers or clients list for no longer using your services or products?
- What’s available to your competitors that you don’t have?
- What do your competitors do that makes them a better choice?
- How can you do better or what can you do better?
Figuring out your strengths and weaknesses shouldn’t take you long. Coming up with opportunities can sometimes be more challenging as you need to consider external data that goes beyond your industry.
To identify your opportunities, you’ll often have to look at the wider economic, business and global trends.
A few questions that can help you identify your opportunities include:
- What are some ways we could improve our customer support?
- Can we automate certain parts of our customer onboarding?
- Are there any resources we can create to reduce our churn rate?
- What can we do to improve our customer retention rate?
- Are we using the tools at our disposal effectively?
- Are we using the right tools or is there something better out there?
- What are some ways to improve our brand messaging?
- How can we make our checkout process easier?
- Which marketing channels are giving us the best ROI?
Another way to identify potential opportunities is by being aware of what your competition is doing and identifying a gap in their offers and marketing. You can then come up with a way to fill that gap.
The last part of SWOT analysis for your small business is identifying threats.
Threats could include emerging competitors, technological advancements that make certain services or products obsolete, changes in the global economy that require you to change the way you operate, or a high employee turnover that could threaten your current growth.
Throughout this article, we’ve explained what a SWOT analysis is and what each element of the SWOT analysis really means. You’ve learned why a SWOT analysis for your small business is important. We’ve also given you all the necessary steps that show you how to do a comprehensive SWOT analysis so you can improve not only your offers but also your position in the market as well as your entire marketing strategy.
The next step is to implement those steps and create a direction for your business that’s going to help you achieve your goals, even in hard financial times.
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