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Why Is a SWOT Analysis Important for Your Business?

SWOT Analysis

SWOT Analysis for Your Business

In recent years, the Strengths, Weakness, Opportunities, and Threats analysis, known as the SWOT analysis, has become a staple of a successful business’s self-assessment. This article will walk you through the process so that you can take your business strategy to the next level.

SWOT Analysis 

What Is a SWOT Analysis?

The Strengths, Weaknesses, Opportunities, and Threats analysis—or SWOT analysis—is quickly becoming popular among business leaders everywhere. Industry leaders are always looking for ways to improve their organization but often struggle to figure out where to start. A SWOT analysis can help you identify areas that could use improvement and can give you a better idea of where to go next.

Similar to a pros and cons list, a SWOT analysis allows you to list out and organize important information about your business in one place. Completing a SWOT analysis requires a great deal of introspection and honesty, which means you’ll need to think critically about all aspects of your business.

While business leaders should begin the SWOT analysis process, they should invite input from all levels of the organization. You want the most accurate picture of your business. To get the clearest idea of your business’s current status, you’ll need to gather and organize everyone’s experience and opinion.

There are a variety of free online SWOT analysis templates that your organization can use to get a more accurate picture of how it’s doing. Usually, a SWOT analysis looks like a table with four boxes—one for each step of the analysis. Make sure each of them is clearly labeled, and then you and your team can get started.

What Are the Steps of a SWOT Analysis?

A SWOT analysis is composed of four key dimensions. Each dimension gives you insight into a different aspect of your business. Here are explanations of the four key components the analysis measures:

Strengths – SWOT

SWOT strength

Here you should list what your business does best. Identify the areas where your business is excelling. Do you have high customer satisfaction? Have you successfully streamlined your production or distribution processes? Are you skillfully managing your budget? There are a host of potential areas of strength to explore.

Be sure to also include the highlights of your workforce. List the strengths of the members of your team—including their skills, education, and track record. Different employees excel in different areas, and you want to capitalize on that.

You should also include any material advantages you have. Maybe you have a substantial loan, high-quality equipment, or an impressive in-person or online store. These are all important assets that everyone on your team should keep in mind.

It shouldn’t be too difficult to come up with a solid list of strengths. You’re likely already proud of them. But thinking a little deeper might unearth areas of success you hadn’t even considered.

Weaknesses – SWOT

SWOT Weakness

This section will likely be harder to tackle. No one likes thinking about their weaknesses. But it’s important that you face them so that they don’t end up holding your business back later. You need to be honest and think broadly about where your business might be lacking.

Could you improve your marketing strategy? Are you missing a particular skill in your workforce? Have you been struggling to meet customer expectations? Do you need to upgrade equipment, technology, or store design?

These are some questions to get you thinking but be sure to spend some time looking at your business from all angles. This section is one of the most important because it forces you to identify where you might be behind the curve. That insight can help you craft a more accurate strategy for improvement. 

Opportunities – SWOT

SWOT opportunity

While the previous two sections have focused on internal aspects of your business, the next two look outward to the external factors affecting your business.

The market is full of possibilities, but if you’ve been busy looking inward, you might not notice some of the opportunities available to you. Here you should list new goals and avenues your business should consider pursuing.

Is your market expanding and offering new directions for your business? Could you develop a new product or process that would better meet the needs of your customers? Are there other organizations that might be willing to partner with you?

Competitive intelligence reports from Archintel can give you a better idea of your market and competitors. With professional insight, you can figure out where the best windows of opportunity are for your business.

Even though they can be easy to overlook, opportunities are everywhere. Thinking seriously about them might open up whole new possibilities for your business. 

Threats – SWOT

SWOT threat

The final dimension of a SWOT analysis requires you to evaluate potential threats to your business model. Threats might not be noticeable at first, but over time they can start to affect your business in a variety of negative ways.

The best way to defend against growing threats is to identify and counteract them. Are your competitors starting to outperform you? Does it seem like your industry is shifting away from its traditional model? Is new technology affecting how you do business?

Threats to your business might be lurking under your radar. But that doesn’t mean you should keep ignoring them. A SWOT analysis can help you recognize what you might have been downplaying before it becomes a bigger problem. 

What to Do After You Complete a SWOT Analysis

A SWOT analysis helps businesses precisely identify the areas where they are already succeeding and those they should improve. But you can’t stop there. You need to use the information you’ve gathered to make real changes for your business.

Companies will often use the data that emerges from a SWOT analysis to make new hiring decisions, choose where to invest more funding, or decide which projects to cut. You can use the information to set concrete goals for your business, like engaging with some of the opportunities you listed or tackling the threats.

Remember, the information you glean from the SWOT analysis process is only valuable when you translate it into action. Take the first steps now to keep your business ahead of the rest.

In business, information is always your friend. A SWOT analysis is a great first step to make sure your business is on the right track. For more comprehensive insight into your industry’s market and competitors, reach out to Archintel today.