SWOT Analysis: A Simple Yet Effective Tool to Find Your Competitive Edge

SWOT Analysis is a tried and tested method in the corporate world that allows you to take a closer look at the capacity of your business. It will not only show you the picture of how your company is performing at the moment but will also help you find out how it will carry through in the coming days. SWOT stands for: Strengths, Weaknesses, Opportunities and Threats. Here’s a detailed guide from Clixpert on why and how to conduct a SWOT analysis for your business.

SWOT Analysis

SWOT Analysis: What is it? 

Some business owners get intimidated when they hear the term “SWOT analysis,” as it sounds complicated. But the truth is, it is a simple but effective tool you can use to help future-proof your business. To ensure your business will thrive for years to come, you need to pause from time to time to analyse your current situation from a broader perspective.

If you need help conducting your SWOT Analysis, read on to find out how you can use this strategic planning tool to help your business achieve growth and development.

Strengths, Weaknesses, Opportunities & Threats

The SWOT Analysis allows you to see both the good and bad elements of your business – from both the insider and outsider perspective, based on your business’ strengths, weaknesses, opportunities, and threats.

In addition, the SWOT Analysis persuades you to look at the future of your business. It will help you determine what you need to do and the appropriate strategic plans you need to put in place to achieve your goals.

Among the four factors that you must look into for the SWOT analysis, the strengths and weaknesses must be viewed internally. It means these factors happen within your business. Meanwhile, the opportunities and threats are external components of the business.

The Strengths and Weaknesses of your company tell you what is happening in your business at the moment, while the Opportunities and Threats paint a picture of the future.

By learning your company’s strengths and weaknesses, you can figure out what you can control in your company’s operational direction.

Some of the examples of these elements include: 

• Reputation
• Company culture
• Geography
• Customer List
• Staff
• Partnerships
• Intellectual property
• Assets

The elements of your company’s opportunities and threats are beyond your control. But learning all about them can help you plan to change the course of your operations. Some of the common examples of these elements include: 

• Government regulations
• Suppliers
• Economy
• Competitors
• Market size
• Changing trends
• Weather
• Financing
• Competitors

Why Do You Need to Conduct a SWOT Analysis? 

All types of businesses, whether big or small, must conduct A SWOT Analysis. Startups can benefit from this strategic planning technique to know which business model to use to build their competitive advantage. Spending time to accomplish the analysis at the early stage of your business will let you know your break-even analysis and look at a realistic ballpark figure. These factors play an important role in your business plan if you want to look for financing options.

Also, existing businesses must do a SWOT Analysis every year. It will serve as a study of how your business is performing annually, and then compare it with previous years analysis. It will also allow you to maintain a smooth-running business by anticipating possible issues and be prepared for it. As a result, it will help you make smarter decisions for the rest of the year. A good example of this is the majority of businesses around the world did not prepare themselves for the ‘threat’ of the COVID19 pandemic which has put a huge burden on most businesses .  As you can see, this is an external factor, one outside of your business, but it is still a ‘threat’.

Essentially, a yearly SWOT Analysis will help you refocus and realign your goals regarding your business, clients and industry.

How to Conduct a SWOT Analysis?

You should note that SWOT Analysis is not a scientific procedure. There is no objective process of measuring the proper way of doing one. This technique depends on your capacity to observe and look back on your company’s internal and external elements.

To ensure that your efforts in doing SWOT Analysis work, you must follow these essential steps: 

Step #1: Make a SWOT Analysis Matrix

The first crucial step in SWOT Analysis is creating a matrix. It is usually a 2 x 2 matrix that contains one box each for the four areas of concern.

SWOT Analysis Template

Step #2: Round Up the Right People

While all the crucial business decisions are made by the company’s founders and other high-level executives, other key team members can also help formulate a SWOT Analysis. It will also be beneficial to gather other people to create a more robust plan, to bring in a fresh perspective.

Teamwork for SWOT Analysis

You may also notice that you will get a more reliable buy-in when making strategic decisions based on the results of your analysis if you let your employees join the process. Some of your customers may also contribute valuable insights if you allow them to help you analyse your business.

Step #3: Conduct a Brainstorming Session

As soon as you determine the participants of your SWOT Analysis team, you can start the brainstorming session. Working with the task members, you can list all the Strengths, Weaknesses, Opportunities, and Threats for your business. If you have a bigger team, you can ask all members to create a list and submit it individually, which can then be compiled into one final list.

Brainstorming SWOT Analysis

Brainstorming can be challenging whether you are doing the SWOT analysis alone or with a large group. To simplify the process, you can look into these factors to start getting things done.

Finding the Strengths

The strength of your business refers to the positive factors that affect its performance. It is something that you and your team can control to steer your present situation.

Some of the questions that you must answer to discover your strengths include:

• What are the things that the company is good at?
• What makes you better than your competitor?
• What is your company’s competitive advantage?
• What do your company do that no other businesses can do?
• What are the resources that you can use?
• What are your advantages?
• What advantages do your employees possess?

Finding the Weaknesses 

The company’s weaknesses are the negative internal factors that affect your business performance. Although these factors are hard to change, they are still within your control.

You may answer these questions to understand your company’s weaknesses: 

• What are the things that your company is bad at?
• What do your competitors do better than your company?
• What are the usual complaints of your customers?
• What are the common disadvantages experienced by your team?
• What are the things that are holding your company back?
• What are the crucial things that your company lacks?
• What do you need to improve?

Finding the Opportunities

The company’s opportunities are external factors that may affect the business in the most positive way. These components are mostly out of your control, but you may choose to use this as your leverage.

You may determine your company’s Opportunities by answering these questions: 

• What possible changes in regulation can help your business?
• Are the current market changes benefit your company?
• Is the present economic landscape positively affecting you?
• Are there any opportunities that your company has yet to pursue?
• Are there any new opportunities available?
• Is the cost of your goods dropping?
• Is there a way for you to acquire helpful resources that you have yet to acquire?

Finding the Threats

Threats are the external factors that may affect your company in a negative manner. These are mostly out of your supervision, but you can develop a plan to lessen your damage.

You will learn all the threats of your company by analysing the answers to these questions: 

• Who are your current competitors?
• Are there any new industry participants that may threaten your business?
• Is your market size decreasing?
• Is the market currently changing in a way that may negatively affect your company?
• Are the prices of your goods rising?
• Are your essential supplies getting scarce?
• Are there any changes in the regulations that may affect your business?
• Is your manufacturer reliable?

Write down all the crucial information so you don’t miss any components that are useful in your analysis.

Step #4: Fill All the Gaps

SWOT Analysis Group Discussion

As soon as you have compiled a list and created the four big SWOT elements, you can begin to fill in the gaps where you need additional explanation. You may take it as an opportunity for your company to fire questions that will let you know the importance of all the items on the list.

You may ask all the members of the group to pick the top three items for every category, or number them in the order of importance, from 1 to 5, with 1 being the least important and 5 being most important. It will most possibly lead to the emergence of a pattern that will point which items you must focus on.

Even if you are the only one in the company handling the tasks for the analysis, you will still have a compelling insight into all the factors you must consider. So do not worry about working on a SWOT Analysis by yourself.

How to Use SWOT Analysis Effectively

Part of your key role as a business owner is to prioritise tasks. It is often inevitable that tough decisions need to be made when it comes to allocating resources. Working on a SWOT analysis can make it easier for you to make an informed decision and allocate resources where they are needed the most. You can accomplish this by doing the following:

Narrowing Your List

You need to begin by looking at the list that you created during the brainstorming session. Then evaluate the list to simplify it and fit a single page when arranged in the 2 x 2 SWOT analysis matrix. It would be less complicated for your company to narrow down the list by checking how powerful a specific factor is and how the factor will most likely happen.

For example, your company will be left in a highly vulnerable position if you rely on a single client for most of your sales. It is also necessary to prepare for a rent increase if you may face lease negotiations.

After doing your single-page matrix, you must still keep the brainstorming list for your future reference. It will help you keep all the significant elements of the analysis since situations change over time.

Developing Strategies

You need to develop an effective strategy to capitalise on your advantages and opportunities for every item on your final list. You may also use it to work on the weaknesses and threats of your company. These early strategies do not have to be very complicated, but you can expand on them in the future. 

In addition, you must remember that various factors work together for stabilisation. You need to determine how to use your strengths to correct your weaknesses or learn how to take advantage of your opportunities to compensate for the threats.

Example of a SWOT Analysis

Here is a SWOT analysis sample for an online clothing business. While plenty of factors may emerge during the brainstorming, these elements are considered the most significant.

Start Working on Your SWOT Analysis Now

Keep in mind that SWOT analysis is not just an accessory for your business. You need to work on it annually or bi-yearly to stand out against other brands, break into a different market and meet your business goals.

You need to conduct Your SWOT Analysis ASAP to come up with an effective strategic plan of action for your company to somehow future proof it.

Contact Us

As Digital Marketing Consultants, we’ve worked with thousands of businesses consulting on SWOT analysis, or their marketing campaigns, growth hacking, reviewing and solving issues and managing their overall marketing needs. Our aim, as always, is to give your business a ‘return on investment’ for any work we do. Take advantage of our 30+ years combined team expertise to help improve your sales and maximise ROI.

CALL 1300 254 973 or get in touch via email info@clixpert.com.au

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