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SWOT to develop your business strategy

by Angus Jones

If you want your business to grow you should ask yourself how does your business compare to the competition? What are your advantages and disadvantages? What are the threats to your success? Are there opportunities that your business has not taken advantage of? This guide will look at a SWOT analysis and show you how you can use this strategic planning technique to help your business identify Strengths, Weaknesses, Opportunities and Threats and then develop business strategies to grow your business.

A SWOT analysis or Strengths, Weaknesses, Opportunities, and Threats analysis is a study undertaken by a business to help understand business competition or help to build a project plan.

WHY should I do a SWOT?

The SWOT tool is a very simple way to develop your business strategy.  It provides a framework to collect your thoughts no matter if you have been in business for years or just starting. (Also see our Marketing guide)

A SWOT analysis is designed to facilitate a realistic, fact-based, data-driven look at your business.

The tool allows you to get an accurate picture of your market position and then helps you to formulate what actions you should take to improve on the current situation.

WHAT do I need to know about a SWOT?

Strengths and weaknesses are internal to your business. These are things that you have control over and can change.

Opportunities and threats are external to your business. These are things going on outside of your business, in the market place. You can take advantage of opportunities and protect against threats, but you can’t change external influences on your business.

 Helpful (for your objective)Harmful (for your objective)
Internal
(within organisation)
Strengths  
x
x
x
Weaknesses
x
x
x
External (outside organisation)Opportunities
x
x
x
Threats
x
x
x

Strengths and Opportunities are helpful to your business and can allow you to grow. 

Weaknesses and threats are harmful and if left unchecked could cause your business to shrink.

HOW do I do a SWOT

Using the table above you need to fill in the bullet points for each of the four quadrants. You may add as many points as you believe are relevant. Be wary of adding a preconceived view versus the real-world reality.

When filling out a SWOT the types of information might include:
(Note points can move between left or right depending if in your circumstance they are a Positive/Helpful on left or Negative/Harmful on right)

Strengths
  • Business strong points
  • Unique selling point
  • Value proposition
  • Internal resource such as your people
  • Tangible assets like IP or capital
  • Marketing or Advertising
  • Business process
  • customers
Weaknesses
  • Factors increasing cost
  • Things your company lacks
  • Factors reducing profits
  • Where competitors are better
  • Resource limitations
  • Unclear selling proposition
  • Is your location ideal
Opportunities
  • Adapting to technology creating new demand
  • Being ready for the future
  • Untapped market
  • Few competitors
  • Press coverage of your business
  • Market is growing
  • Upcoming events
Threats
  • Competition activity
  • Changing customer attitude to your company
  • Government policies
  • Fluctuating markets
  • Supply constraints
  • New market trends

Once you have completed your SWOT it will give you a clear picture of your market position.  As a result, you can create several strategies to take advantage of strengths and opportunities.  Also, develop strategies to address weaknesses and threats. You can then prioritise those strategies based on what you need to do to grow your business. Lastly, you build an action list with dates to address those strategies.

HINTS

If you are starting a new business, a SWOT analysis is part of the business planning process. It will help you formulate a strategy so that you start off in the right direction.

If you are an established business can use a SWOT to assess the current situation and determine a strategy to move forward. Note that things are constantly changing and you will most likely want to reassess your strategy, with a new SWOT every 12 months.

Having an external person like a customer contribute to the SWOT process can ensure a dose of reality.

Sample Business selling pears
 Helpful (for your objective)Harmful (for your objective)
Internal
(within organisation)
Strengths
Good profits
Excellent staff with spare capacity  
Weaknesses
Prices to expensive
Brand not known
External (outside organisation)Opportunities
Produce pear pies
Sell to restaurants
Advertise pears
Threats
Oranges become more popular
Supply issues

Strategy 1. Sell more pears cheaper
Strategy 2. Build pear pie business

Action 1. Reprice pears by end of the month
Action 2. assign a staff member to research pear pie’s by end of week
Action 3. Get staff to phone restaurants offering them pears by the end of next week

SUMMARY – actions to match your business strategy

A SWOT analysis is a framework allowing you to evaluate your business or business idea from a competitive position and to develop strategic planning. By reviewing strengths, weaknesses, opportunities, and threats you can gain a fresh perspective and new ideas. A SWOT can be done in as little as an hour which then can be used to develop strategies to grow your business which will be delivered by a list of action items.

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