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How to Complete a SWOT Analysis

Conducting a SWOT analysis can provide you with strategic insights that enable you to improve business operations. Learn how to conduct a SWOT analysis here.

Understanding every aspect of your business can help you find ways to improve it, ultimately increasing your growth, revenue, and profitability. However, there are so many things you can learn about your company and several data points you can use to identify what's working and what isn't.

Knowing which areas need improvement is just as important as knowing which areas are doing well in strategic planning. After all, if you're not constantly improving your business in every aspect, you may fall behind the competition. Unfortunately, auditing your business to learn more about what you can do to improve it may seem daunting. That's where a SWOT analysis can help.

A SWOT framework is a business tool that allows you to easily document internal and external factors that affect your business performance, including strengths, weaknesses, opportunities, and threats. With the information you collect, you can brainstorm ways to improve upon your weaknesses and eliminate threats while celebrating your strengths. Analyzing these internal and external factors can help you improve every aspect of your business operations.

What is a SWOT analysis?

SWOT stands for strengths, weaknesses, opportunities, and threats. It's used for business strategy planning, taking into account both internal and external factors that can be used in your business planning and goal-setting process. Strengths and weaknesses are internal factors that you have direct control over. In contrast, external factors are your opportunities and threats, which you'll find with some market research, ultimately comparing your business to others in your industry.

SWOT analyses help you identify areas of improvement for the business that are critical to your success and can help you gain a competitive advantage. You can use a SWOT analysis for the entire business or more specific projects. For example, your marketing team might do a SWOT analysis of your email marketing strategy, comparing its strengths and weaknesses and looking to see how the competition does things differently. You can even do a personal SWOT analysis on yourself to set goals for yourself as a business leader.

When using a SWOT analysis to identify key areas of the business as a whole, they're used to help business leaders identify growth opportunities and track benchmarks. Every SWOT analysis consists of four components, which are typically laid out in a grid format. The four components of every SWOT analysis are:

  • Strengths: Your organization's strengths are the things that you excel at. If you're doing a SWOT analysis of your marketing strategy, your strengths might be things like consistent branding or a strong mission statement. However, if you're looking at organization-wide strengths, they might be things like strong brand recognition or a good reputation. Your strengths should separate you from your competition, identifying what you do better than anyone.
  • Weaknesses: Your weaknesses identify areas of the business that need improvement. These are the things you don't excel at and prevent you from reaching your small business goals. Your weaknesses could be anything from a high employee turnover rate to debt or lack of funding.
  • Opportunities: Opportunities are one of the external factors of a SWOT analysis that refer to opportunities you have to improve your business and give it a competitive edge. A new business model or a new stream of revenue are both examples of opportunities. On a more granular level, if you're doing a SWOT analysis of your marketing strategy, opportunities might be things like digital ads or different strategies you haven't leveraged in the past.
  • Threats: Threats are another external factor that typically involves your competition. When you perform competitive research, you can find out what your competitors are doing that may make customers or clients want to use their products and services over yours. Threats can also be other external factors like the seasonality of your business, weather, or rising production costs.

When to conduct a SWOT analysis

You can conduct a SWOT analysis at any point to identify these key areas of your business. However, you should always use analysis before making a decision on something that can affect the business. Examples of when you'd use a SWOT analysis include:

  • Considering new initiatives
  • Trying a new stream of revenue
  • Changing the business model
  • Changing internal policies
  • Considering new opportunities
  • Forming new partnerships with other companies
  • Company acquisitions
  • Changing strategies in different departments of the business

SWOT analyses are used to help you make better decisions while understanding critical information and data about your business. Doing a SWOT analysis on a quarterly basis can help you identify new opportunities, threats, and even weaknesses as your business evolves.

Importance of SWOT analysis

A SWOT analysis is important for every business because it can help you solve major challenges and answer important questions, making decision-making easier for leaders. Benefits of a good SWOT analysis include:

  • Visualizing complex problems: A SWOT analysis can help you visualize complex problems, breaking them up into smaller pieces to make them more manageable. Most organizations use data tracking to learn about operations, customers, and internal and external factors that affect their bottom lines. However, with so much data available, it can become overwhelming trying to understand and utilize it effectively. A SWOT analysis can help take that data and use it to formulate relevant considerations, breaking down data and complex ideas into easy-to-read and understandable bullet points on a diagram.
  • Considers external factors: Most companies focus on analyzing internal factors, or the factors they have the most control over. However, when you're only looking at your strengths and weaknesses, you're missing out on everything going on in the industry. If you're not performing a competitor analysis on a regular basis, you might not know what your competition is doing to earn your customers.
  • Can be applied to any business or strategy: A SWOT analysis has many applications. It can be applied to any business in any industry, ranging from major corporations to small e-commerce companies. They can also be used across departments and strategies. For example, you can do a SWOT analysis of your overarching digital marketing strategy or pinpoint different strategies to analyze and perform an SEO SWOT analysis, email marketing SWOT analysis, and even a social media SWOT analysis.
  • Easy to prepare: SWOT analyses are easy to prepare for almost anyone in the organization, but the person making it should have valuable insight into the business. If you're doing a SWOT of your business operations, the operations manager, CEO, or other leaders who know what's happening in that part of the business are best suited for the task. Meanwhile, if you're doing a human resources (HR) SWOT, you'd want it done by the HR manager. Ultimately, many different staff members can contribute to a SWOT, depending on what you plan on using it for. Since they're fairly straightforward, it won't take much explanation for each team member to do their part.
  • Improved communication: SWOT analyses can improve communication throughout organizations. For example, the business owner might think everything is going well in a department because they don't communicate with them often. Unfortunately, leaders, executives, business owners, and stakeholders can't be everywhere at once. However, a SWOT analysis might highlight issues the owner didn't know about because they don't have the time to manage them. The more decision-makers know about different parts of the business, including its strengths, weaknesses, opportunities, and threats, the better decisions they can make for the good of the business.

How to conduct a SWOT analysis

Conducting a SWOT analysis is easy, and anyone can do it. First, you should start by formatting your analysis by breaking it up into four sections, with the internal factors—including strengths and weaknesses—on top and external factors—such as opportunities and threats—on the bottom. The goal is to make your SWOT as easy to read as it is to create, so you'll only need bullet points and don't have to explain everything in great detail.

Once your SWOT is complete, you'll have a clear view of internal and external factors affecting your potential growth, allowing you to brainstorm solutions to different problems. The basic steps for conducting a SWOT analysis are as follows:

1. Put a team together

When conducting a company-wide SWOT analysis, you'll need a diverse team from different areas of the business for a comprehensive overview of the business. For example, you'll need a representative from HR, operations, marketing, and so on. Every department should have a voice in the SWOT to give you a clear picture of your business.

2. Set a goal for your SWOT analysis

Every SWOT analysis needs a clear goal. Why are you conducting a SWOT in the first place? For example, you can aim to learn more about your business or decide if you should merge with another business. Remember, SWOTs should be done before you make any major decisions regarding your business, so any opportunity you have may require a thorough analysis.

3. Make a list of strengths, weaknesses, opportunities, and threats

Internal factors are the company's strengths and weaknesses. Identifying those will be easiest. When identifying strengths, consider what you're doing well, including your strongest assets and areas where you excel. For example, a marketing agency might excel at branding. For your weaknesses, you'll need to consider the aspects of the business where you fall short. For example, you can list products that don't sell well or areas of the business that detract from your goals, such as high employee turnover.

Your opportunities and threats may be more difficult to distinguish because you don't think about them daily. Consider things happening outside your company that are just as important as your strengths and weaknesses because they affect you. For example, changes to customer demand, access to materials, and your competitors getting more funding could affect your business even though they're not happening directly to you or as a result of something you've done.

When considering your opportunities, you'll need to think about things that can help improve your business. For example, if you have access to an investor, an opportunity could be to secure more funding. When considering your threats, you should look at your competition and factors beyond your control. For example, a threat to a Christmas tree business would be seasonality.

4. Refine, organize, and prioritize the ideas in each category

Once you've identified the internal and external factors of your SWOT analysis, you can start refining and organizing the ideas in each category on your template. Prioritize what's most important to you, the items on your list that you'd want to tackle first. However, you should also consider items that can be done easily instead of putting them off to form an action plan for more important business initiatives.

5. Create an action plan to address SWOT analysis priorities

After prioritizing your SWOT findings, you can start to brainstorm action plans to align your business goals with your strengths, weaknesses, opportunities, and threats. Take each item out of the SWOT and begin creating strategies.

For example, if you're trying to decide whether you need to hire more employees, you can look at weaknesses, such as high employee turnover, and try to find a way to reduce your turnover rate through effective HR strategies.

When you're done with your SWOT analysis and have a strategy in place to address priorities, you can revisit your analysis on a quarterly, monthly, or bi-annual basis to determine whether or not you're hitting your goals.

SWOT analysis template

Need help creating your SWOT analysis? We've created this template to help you identify your strengths, weaknesses, opportunities, and threats. Simply fill in the blanks, and you'll have a complete analysis in no time.

SWOT analysis example

The process might seem intimidating or even daunting if you've never conducted a SWOT analysis. In this case, looking at SWOT analysis examples might help. Let's use a company everyone around the globe has heard of – Netflix. Here's our SWOT analysis of Netflix:

Internal strengths:

  • Brand recognition: Netflix is a household name, and many people have subscriptions or know people who do. Their company frequently comes up on the news and in popular media.
  • Revenue growth: Netflix isn't a new company, but they've continued to experience growth since their inception, taking advantage of opportunities like switching from a DVD rental business to a streaming service.
  • Affordable pricing: Netflix is less expensive than cable and has transparent pricing plans.

Internal weaknesses:

  • Limited copyrights: While Netflix creates some of its own programming and movies, they don't own most of the content available on the streaming services. After the rights expire, the content may be viewable on competitive streaming platforms like Hulu or HBO Max.
  • Rising prices: Netflix was once considered an affordable option to many who wanted to make the switch from cable. However, as Netflix continues to increase its price, it may lose customers to more affordable streaming services.

External opportunities:

  • Ad-based streaming: Many Netflix competitors, including Hulu, have a lower-priced plan, leveraging ads to increase their revenue while providing customers with affordable options.
  • Original content: Netflix's original content could help increase revenue while avoiding the pitfalls of limited copyrights.
  • Reduce costs: Netflix can reduce costs to bring back customers who have left the streaming service due to rising prices.

External threats:

  • Competition: Netflix's biggest threat is the growing competition in the streaming services industry, with Hulu, HBO Max, Showtime, and many more channels entering the market.
  • Piracy: Many people still have access to pirated media that allow them to download content for free.
  • Account sharing: Customers sharing accounts potentially limits revenue.

Final notes

A SWOT analysis can help you make better decisions when it comes to your business and its growth potential. Analyzing your strengths, weaknesses, opportunities, and threats is an effective way to measure your business, set goals, and make important decisions that can affect your organizational health.

SWOT analysis FAQs

What are the 4 components of a SWOT analysis?

The four components of a SWOT analysis are:

  1. Strengths
  2. Weaknesses
  3. Opportunities
  4. Threats Strengths and weaknesses are internal factors that you have control over. Your strengths are areas where you excel, and your weaknesses are areas that can be improved. Meanwhile, your opportunities and threats are external factors you have no control over, but learning about them can still be useful during the decision-making process.

What are examples of threats in a SWOT analysis?

Threats in a SWOT analysis are external factors that threaten your organization. They can be anything from the seasonality of your business to weather and even government policies, depending on your industry. Common examples of threats include:

  • Shifts in customer demand
  • Supply chain issues
  • Rising shipping costs

What is the most important part of a SWOT analysis?

All parts of the SWOT analysis are important in helping you make decisions. However, analyzing your internal factors, such as strengths and weaknesses, can help you determine which areas you need to focus on the most. These factors are within your control and are typically the easiest to strategize. However, you shouldn't ignore external factors because they impact your business more than you know.

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