Have you ever wondered why businesses fail all of a sudden even with everything looking seemingly fine?
A lot of reasons could have accounted for that failure and which one of the prominent reasons is the failure to carry out a SWOT analysis of your business at an early stage.
SWOT analysis is a business planning tool that is used to identify businesses strengths and weakness as well as opportunities and also threats that the business may likely face.
Hi everyone my name is Timileyin and in this post I will be writing on the fundamentals of SWOT analysis for your business. Read between the lines, share, comment and ensure you put into practice.
The full acronym of SWOT is Strength, Weakness, Opportunities and Threats respectively.
There are factors that influence the progress of any business and the factors can be split into two- Internal and External.
The internal factors as regards to SWOT are Strength and Weakness while the external factors are Opportunities and Threats.
Strength and Weakness are said to be internal factors because they are made manifest as a result of what the business is capable to do and not do.
Opportunities and Threats as said to be external factors because of the result they produce as a result of the influence of real world factors such as the environment, economic strength of the location, type of competitions and so on.
Having known the acronyms, let’s understand why we need to use this tool in our business.
The first reason is to
Get a Deeper Understanding into where your Business is heading to
The second reason is to
Understand how your Business Niche Works
The third reason is to
Help you Envisage potential threats and the necessary actionable steps to counter it
The fourth reason is to
Help you fully optimize opportunities in terms of your advertising approach and marketing approach
Having known the acronyms and the importance of SWOT analysis, lets now understand what each acronym means in details.
This is an internal factor as earlier stated and to do this, you need to look inward and make an outline of those things you consider as your strengths in that business area. To help you with that, you can answer these questions genuinely
- What are the things you do really well?
- What things as it relates to your business do you consider you do skillfully?
- What extra knowledge do you think you have that makes you better than your competitors?
- Do you have any experience in that business area and if so, what are they?
- Where do you think you are most effective in your business?
This factor is quite difficult to write than strength but if you are going to be very honest with yourself then you need to state them out. You can get some of your weaknesses from critics you get from your customers.
You can also ask yourself questions such as
- What areas do you need improvement?
- Which part of your business isn’t profitable?
- Which areas do you need more knowledge on?
- What are the things that cost you unnecessary time and money?
This factor is based on external occurrence as stated above. Some of these external factors may come from the cultural perspective, technological, legal and so on.
To identify the opportunities, you need to answer some questions which are
- What business projections are you presently working on?
- Do you have potential customers you can reach out to?
- Do you have products or services you can leverage on for your business?
This is an external factor and this factor has the ability to damage your business if the necessary steps aren’t taken to counter it.
Threats could appear in the form of where your business is located, limited labor, high cost of production and so on.
To fully identify the threats you are being faced with, you need to also answer some questions which include:
- List the stumbling blocks in your business?
- Highlight the strengths of your contemporaries?
- What do your contemporaries do that you don’t?
- You need to fully understand what’s going on both in the industry and in the economy at large?
Having read this post, you can then understand what SWOT analysis is and how you can maximize it.