What is SWOT analysis and why is it important?

You have probably heard people talking about SWOT and wondered what all the fuss was about!

SWOT analysis is a means of looking at your business and determining the factors which will have the most impact on it. It is not a one off process, but don’t let this put you off because you will reap the rewards of doing and redoing your SWOT analysis.

So let’s cut to the chase, what does SWOT stand for?

* S – Strengths
* W – Weaknesses
* O – Opportunities
* T- Threats

Strengths and Weaknesses apply to things inside your business i.e. they are internal to your business such as products or staff.

Opportunities and Threats apply to things outside your business i.e. new markets or new competition.

Why is it important?

Doing a SWOT analysis will make you focus on your business from all angles and will enable you to identify key areas either to advise your staff or if it’s just you, then to focus on them yourself.

You can either do your SWOT analysis as a straight forward list or in a four square grid, which ever you find easier.

Getting Started

Always start at the beginning with S, not only is it a logical way to approach this task, but you also get to start with the positive things.

Be very honest when you do this, otherwise the only person you are fooling is yourself. Get all your staff involved, they will see things you do not. If you are a sole trader get some help from friends, family or a marketing company, it is much easier to brainstorm with someone else than it is alone.

You need to spend some time on this because you do need to go into this in fine detail, you need to be picky and find the small details. Something missed now could have a significant impact on your business; it may be a missed strength you don’t capitalise on or more importantly a major weakness or threat you miss completely, which could mean a very bad outcome for the future of your business.

SWOT analysis will stimulate new ideas and new opportunities, so look on this as a positive move for your business, not a negative one because you have to acknowledge weaknesses and threats; after all you are only going to turn these into strengths and opportunities, so lets get started.

SWOT

Strengths – these are all the strong things within you company: the reasons customers do business with you, what you do well, and your advantages over the competition. This could include products, service, location, skills, etc.

Weaknesses – these are all things within your company: insufficient skills in some areas, you are a sole trader, size, product range, service, no web site, lack of promotion and marketing.

Opportunities -where your opportunities are now and in the future. This section could include new markets, new technology, new services, new regulations or legislation or perhaps just as simple as adding something small that your competitors do not do at a customer service level.

Threats – these are external to your company and are the actual and potential threats that you face. These could include your competitors moving next door, a change in regulations or legislation, bad debts or new technology.

Having now got your four lists, you need to look at

* How you can build on your strengths
* Reduce you weaknesses
* Grab hold of your opportunities
* Combat or dilute the threats

Also

* Can you use your strengths to take advantage of any opportunities
* Can you use your strengths to combat or dilute any of the threats
* How can you turn your weaknesses into strengths to take advantage of any opportunities
* How can you turn your weaknesses into strengths to combat or dilute any of the threats

Having done all this, identified all the critical issues, prioritised and organized them all, worked out the necessary strategies and overcome the problem areas, you can pat yourself on the back…… and start all over again, but before you do start again, take a minute to appreciate how worthwhile it was and how far you have come.

Vanessa Hodge is the owner of Image Connect, a web design, marketing communications and printing company for new start up and small businesses. You can read further articles, hints & tips and more at Image Connect Websites, Marketing, Printing or Image Connect London Blog

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