“Our business is absolutely flawless and we have nothing to improve upon” — said no business owner ever. Instead, we business owners often think of all the ways we could potentially grow our businesses and guard against threats.
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A SWOT analysis is a strategic planning technique that puts your business in perspective using the following lenses: Strengths, Weaknesses, Opportunities, and Threats. Using a SWOT analysis helps you identify ways your business can improve and maximize opportunities, while simultaneously determining negative factors that might hinder your chances of success.
While it may seem simple on the surface, a SWOT analysis allows you to make unbiased evaluations on:
Practically anything that requires strategic planning, internal or external, can have the SWOT framework applied to it, helping you avoid unnecessary errors down the road from lack of insight.
You may have noticed by now that SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. The framework seems simple enough that you’d be tempted to forgo using it at all, relying instead on your intuition to take these things into account.
As a small business owner, I was tempted to forgo using it, thinking I knew everything about my business anyway. I was wrong. Doing a SWOT analysis is important. Here’s why.
A SWOT analysis is an important step in your strategic process because it gives you the opportunity to explore both the potential risks and the exciting possibilities that lie ahead. You’re giving yourself the space to dream, evaluate, and worry before taking action.
Your insights then turn into assets as you create the roadmap for your initiative.
For instance, making a SWOT analysis for my business allowed me to consider the weaknesses and threats that my business might face in the future, which in turn led me to address any concerns or challenges and strategize on how to mitigate those risks.
At the same time, I was able to identify strengths and opportunities which helped inspire innovative ideas and helped me dream big. Both are equally important.
Instead of diving head first into planning and execution, I had to first take inventory of all my assets and roadblocks. This process helped me develop strategies that leverage my strengths and opportunities while addressing and mitigating the impact of weaknesses and threats.
As a result, I gained a comprehensive understanding of my current situation and created a more specific and effective roadmap. Plus, a SWOT analysis is inherently proactive. This means I was better equipped to make informed decisions, allocate resources effectively, and set realistic goals.
As I continued to identify weaknesses and threats, I was better able to account for them in my roadmap, thereby improving my chances of success.
Also, accounting for mitigating factors allows me to allocate my resources wisely and make informed decisions that lead to sustainable growth. Using the SWOT analysis as a guide, I can confidently face challenges and seize opportunities.
As my organization grows and changes, I’ll be able to strike things off my old SWOTs and make additions. With this I can look back at where I came from and look ahead at what’s to come.
In other words, SWOT analyses serve as a tangible history of your progress and provide a reference point for future decision-making. With each update, your SWOT analysis becomes a living document that guides your strategic thinking and helps you stay agile and adaptable in an ever-changing business landscape.
By maintaining this written record, you foster a culture of continuous improvement and empower your team to make data-driven decisions and stay aligned with your long-term vision.
Conducting a SWOT analysis will help you strategize effectively, unlock valuable insights, and make informed decisions. But what exactly does a SWOT analysis include?
Let’s explore each component: Strengths, Weaknesses, Opportunities, and Threats.
SWOT strengths are the unique advantages and internal capabilities that give your company a competitive edge in the market. A strong brand reputation, innovative products or services, or exceptional customer service are just a few examples.
I have discovered that by identifying and capitalizing on your strengths, you can build a solid foundation for growth. You can also use those strengths in other areas that might need additional support, for instance, increasing customer satisfaction.
When asked how conducting a SWOT analysis on his business helped him, Rahul Vij, managing director of WebSpero Solutions replied that the analysis identified “a key strength in our customer service, which we then promoted more heavily in our marketing campaigns, resulting in a 20% increase in customer satisfaction scores.”
When I was looking into the strengths of my own business, here are some questions that I asked myself:
SWOT weaknesses are areas where you may face challenges or fall short of your potential. It could be outdated processes, skill gaps within the team, or inadequate resources.
By acknowledging these weaknesses, you can establish targeted initiatives for improvement, upskill your team, adopt new technologies, and enhance your overall operational efficiency.
When asked if he had any mistakes to avoid when compiling a list of weaknesses in a SWOT analysis, Rob Cheng, Founder of Big Hat Marketing said:
“You really need to resist the temptation to use an ‘inside-out’ approach to SWOT analysis . Instead, think ‘outside-in’ and approach it as if you were working for your top competitors — how would they try to position your weaknesses? That's how you find useful insights that can help turn a SWOT into a strong strategic market position.”
Some of the questions I used to identify my company’s weaknesses include:
While I was compiling the list of my business’s strengths and weaknesses, it occurred to me that there are some opportunities for my business to grow.
This is one of the many advantages of making a SWOT analysis for your organization. It helps you identify external and internal factors that can contribute to your company's progress.
These may include emerging markets, technological advancements, changes in consumer behavior, or gaps in the market that your company can fill. By seizing these opportunities, you can expand your market reach, diversify your product offerings, forge strategic partnerships, or even venture into untapped territories.
Here are some questions that helped me identify the opportunities for my business’s growth; it might be helpful to ask your research team these questions before getting started:
In a SWOT analysis, threats are external factors that are beyond your control and pose challenges to your business. Factors like increased competition, economic volatility, evolving regulatory landscapes, or even changing market trends are examples of threats.
By proactively assessing and addressing them, you can develop contingency plans, adjust your strategies, and minimize their impact on your operations.
When I was preparing the SWOT analysis of my business, I was forced to confront these threats. This can be a scary process, so here are some questions you should consider to help streamline the process:
During the creation process of my business’s SWOT analysis, we had to take both internal and external factors into account. I’ll cover those next.
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A SWOT analysis doesn’t have to be fancy. This SWOT analysis chart provides a clear and structured framework for capturing and organizing your internal strengths and weaknesses, and external opportunities and threats.
This chart was the perfect visual aid that I needed to help me make sense of the wealth of information I gathered during my analysis. (Plus, you can always customize and paste it into a document you plan to share with stakeholders.)
But remember: Filling out the SWOT chart is just one step in the process. Combine it with our entire market research kit, and you'll have all the tools necessary to help your organization navigate new opportunities and threats.
The template above helps get you started on your own SWOT analysis.
But if you’re anything like me, it’s not enough to see a template. To fully understand a concept, you need to see how it plays out in the real world.
These SWOT examples are not exhaustive. However, they were a great starting point for me as I conducted my SWOT analysis, and I hope they help you too!
Here’s how I would conduct a SWOT analysis on Apple.
First off, strengths. While Apple has many strengths, in my opinion the top three are:
Apple’s brand is undeniably strong, and its business is considered the most valuable in the world. Since it’s easily recognized, Apple can produce new products and almost ensure a certain degree of success by virtue of the brand name itself.
Apple’s highly innovative products are often at the forefront of the industry. One thing that sets Apple apart from the competition is its product inter-connectivity. For instance, as an Apple user, I can easily sync my iPhone and iPad together and access all of my photos, contacts, and apps no matter which device I am using.
Lastly, customers enjoy how easy it is to use Apple’s products. With a sleek and simple design, each product is developed so that most people can quickly learn how to use them.
Next, let’s look at three of Apple’s weaknesses:
While the high prices don’t deter Apple’s middle- and upper-class customer base, they do hinder Apple’s ability to reach a lower-class demographic.
Apple also suffers from its own exclusivity. Apple controls all its services and products in-house, and while many customers become loyal brand advocates for this reason, it means all burdens fall on Apple employees.
Ultimately, Apple’s tight control over who distributes its products limits its market reach.
Lastly, Apple is held to a high standard when it comes to creating and distributing products. Apple’s brand carries a high level of prestige. That level of recognition inhibits Apple from taking risks and experimenting freely with new products that could fail.
Now, let’s take a look at opportunities for Apple. It was easy to recognize opportunities for improvement, once I considered Apple’s weaknesses. Here’s a list of three that I came up with:
One of Apple’s biggest weaknesses is its distribution network, which, in the name of exclusivity, remains relatively small. If Apple expanded its network and enabled third-party businesses to sell its products, it could reach more people globally, while alleviating some of the stress currently put on in-house employees.
There are also plenty of opportunities for Apple to create new products. Apple could consider creating more affordable products to reach a larger demographic, or spreading out into new industries — Apple self-driving cars, perhaps?
Finally, Apple could continue advancing its products’ technology. Apple can take existing products and refine them, ensuring each product offers as many unique features as possible.
Finally, I looked at threats to Apple because believe it or not, they do exist. Here are three of Apple’s biggest threats according to their customers (me):
Apple isn’t the only innovative tech company out there, and it continues to face tough competition from Samsung, Google, and other major forces. In fact, Samsung sold more smartphones than Apple did in Q1 of 2022, shipping 17 million more units than Apple and holding 24% of the market share.
Many of Apple’s weaknesses hinder Apple’s ability to compete with the tech corporations that have more freedom to experiment, or that don’t operate in a closed ecosystem.
A second threat to Apple is lawsuits. Apple has faced plenty of lawsuits, particularly between Apple and Samsung. These lawsuits interfere with Apple’s reputable image and could steer some customers to purchase elsewhere.
Finally, Apple needs to improve its reach internationally. If Apple can’t compete globally the way Samsung or Google can, it risks falling behind in the industry.
Now that we’ve explored the nuances involved with a SWOT analysis, let’s fill out a SWOT template using Starbucks as an example.
Here’s how I would fill out a SWOT template if I were a part of Starbucks’s marketing team.
If you are a small business owner like me, you may have trouble relating to the SWOTs of big brands like Apple and Starbucks (I know I did).
Here’s an example of how a dine-in Thai restaurant might visualize each SWOT element.
If I owned a small restaurant, I would lean into my culinary expertise and service skills to find opportunities for growth and brand awareness. A SWOT analysis can also help identify weaknesses that can be improved, such as menu variation and pricing.
While a restaurant might not be as worried about high-level lawsuits, a small business might be more concerned about competitors or disruptors that might enter the playing field, or well, allergies.
In another small business example, let’s take a look at a SWOT analysis for a local boutique.
This shop might be well known in its neighborhood, but it also might take time to build an online presence or get its products in an online store. Because of this, some of its strengths and opportunities might relate to physical factors while weaknesses and threats might relate to online situations.
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