This is where a SWOT analysis comes into play. It’s a useful tool for making improvements and keeping your marketing goals on track. In this guide, we will explain what a SWOT analysis is, what this method consists of, and how to do a SWOT analysis yourself.
You may be a seasoned company with an established business plan, or you may be just starting out and are about to create a website for your new business. In any case, identifying and understanding your competitors at each step of the process can lead you to building a better business strategy.
Table of Contents
What is a SWOT analysis?
SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. A SWOT analysis is a strategy that can be used in any company, e-commerce and online store , to measure and evaluate its overall performance, and that of its competitors, in an objective way. All of these factors help business owners make smarter decisions to grow their business , such as whether a company should expand into a new industry or rebrand.
The strengths and weaknesses parameters have to do with internal factors such as reputation, the work team, location and intellectual property. These considerations are not necessarily permanent and may vary over time. Maintaining or changing them (which may be for the better or for the worse) is within the control of the organization itself. So, assuming you want to make a positive change, you will have to put in the effort and time to make that happen.
Opportunities and threats are related to external influences, such as competitors, market trends, and material prices. Unfortunately, these are not under the control of the organization and therefore cannot be changed. That being said, companies must learn to work with these factors to their advantage, and also adapt their strategies accordingly in order to compete with other businesses in the sector.
Why do a SWOT analysis?
As mentioned above, SWOT analysis is a process that can help draw conclusions on different business ideas , as it allows you to see the bigger picture clearly. Once you have gained valuable data and insights, companies can formulate a more strategic plan.
Additionally, a SWOT analysis forces you to examine your business in new and interesting ways regarding its strengths and weaknesses. This preparation allows you to not only be ready to face any challenge that may affect your business, but also offers you a deeper understanding of the possible opportunities or threats within your target market .
How to do a SWOT analysis?
The SWOT analysis should be a collaborative and inclusive process, so before you get into it, be sure to bring together your partners, shareholders, and any other decision makers who are going to contribute their ideas. In this way, you will ensure that you listen to all the opinions and diverse points of view that will enrich your SWOT analysis in general.
Next, we will guide you through the stages of how to do a SWOT analysis to analyze both your own company and those of your competitors. For each one, grab a pen, piece of paper, or some other note-taking device. In it, create four sections for each stage that you are going to analyze. Mark the sections with these headings: Strengths, Opportunities, Weaknesses, and Threats. And remember that when it comes to this type of analysis, you have to put prejudice aside. The more sincere you are, the better and more useful your results will be SWOT analysis.
Steps to conduct a SWOT analysis:
To get a better idea of what a SWOT analysis of a company might look like, we have taken the hypothetical example of a massage therapist who is going to start a business on his services website .
1. Strengths
Strengths are the things a company does well overall, giving it a competitive advantage in its industry and benefiting its customers. In the case of your own company, identifying your strengths can help you enhance them.
When it comes to competitors, consider their strengths as a goal to aim for. Ask yourself: How can I do what they do, but better? or, How can I put my own spin on this idea so that it trumps yours? Here are some questions to consider as you begin to analyze the strengths of your business:
- What are the competitive advantages of your company in the sector?
- What features do you offer that are unique and valuable?
- In which processes do you excel?
- What attracts your customers?
- Are you a market leader?
- If so, how did you get there?
- Is the organization expanding and hiring new employees?
What strong assets does the company have? For example: intellectual property, shareholders, buildings, etc.
2. Weaknesses
These are the aspects of an organization that could be improved. During this phase of the SWOT analysis, it is especially important to be true to yourself. It can be a bit awkward at first, but if you don’t focus your attention on something you consider to be a weakness, you won’t be able to improve it.
Note that many of the points you’ve discussed about strengths can also be covered in this section, but with a reversed meaning. For example, a strength might be “expanding your business and hiring new people,” while a weakness might be “losing employees to the competition.” So keep them in mind, in addition to these types of questions:
- What could your company do better?
- What processes could be improved?
- Does your company lack an established reputation?
- What is your company struggling with compared to others in the industry?
- What do your customers complain about the most?
- Are you losing employees?
What assets does your company lack? From patents to financing or jobs, among others.
3. Opportunities
Having a business has to do with knowing how to seize the moment. The opportunities are probably the same for you as they are for your competition, if not very similar. Recognizing them is the first step and taking advantage of them before your competition does is the second. Likewise, you must do it at the precise moment according to your business, depending on the stage of development in which you are. Here are more questions to do an analysis of your opportunities correctly:
- What is the latest trend? For example: an ecological initiative to use recycled packaging or work with influencers on social networks to promote your business.
- What are some upcoming events you could take advantage of? Like a fair, a vacation or a press release.
- Is there a gap in your market? Like a cheaper provider or the opportunity to cut out the middleman.
- Is there an opportunity to expand to a larger building or a better location?
- Could your business sell fast? Or, conversely, could you buy smaller local businesses to expand?
4. Threats
These are external factors that can put a business in a negative situation. And just like the opportunities, the threats are often similar to both you and your competitors. However, some threats can be individual to an organization, such as a public relations scandal caused by a dissatisfied customer. It is very important to learn how to mitigate them and prevent them from becoming bigger problems in the future.
Although threats appear last in the SWOT analysis, it may be a good idea to address them first. Like a small fire, if not acted quickly, threats can sometimes cause irreparable damage.
Here are some examples of potential threats:
- Is there a customer who is explicitly dissatisfied with a certain product or service?
- Does the market fluctuate, ie prices go up, consumers buy alternatives, etc.?
- Are there new government regulations to pay attention to?
- What is the competition doing better? Do a market study to find out.
- Will new technology be available in the near future that could render your business products or services obsolete?
- Are consumers no longer expressing interest in your services?
- Opportunities and threats in the SWOT
Make a plan
Now that you have analyzed the most important components that affect the success of your business and your competition, you already have the necessary tools to develop a strategy. This plan will serve as a guide to introduce improvements in your company and compete on equal terms with your competition.
Keep these five steps in mind to make your plan:
- Get information about your own SWOT analysis of your employees and relevant people in your company.
- Make a plan, which involves using your strengths to counter your weaknesses, as well as finding opportunities through your threats. If you’ve just started a business , write these components down as part of your business plan as well.
- Communicate your ideas to your team members, making sure everyone is on board and held accountable.
- Prioritize your actions, starting with the most important factors. (Maybe it’s your threats if they were urgent matters).
- Execute your plan. Present the plan to your team in a task list format, making sure to designate one person for each topic.
As your business grows and evolves, you have to know that this is just a snapshot of the moment in time. Many of these factors may change in the future. It’s a good idea to do this exercise again, so you can properly assess where your business stands in your industry and how far you’ve come.
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