Welcome to part 3 of our business planning
series – what is a SWOT analysis A SWOT analysis is a technique of documenting
your business’s internal strengths and weaknesses and external opportunities and threats, prioritising
those lists, then using that information as part of your business plan. A ‘SWOT’ analysis will enable you to identify
where you are situated in the market and to facilitate a strategic approach by:
– building on strengths – minimising weaknesses
– seizing opportunities – counteracting threats To undertake a SWOT analysis of your business:
Identify and list what you think are your business’s strengths. Strengths can be any
of the factors that give you a competitive advantage; it could be your location, your
ability to appeal to a specific market or your recognition as an industry leader.
Repeat the same process to generate a list of weaknesses. Weaknesses are any of the factors
which give competitors an advantage, for example you may have a lack of intellectual property,
or a declining market share. Now, repeat the process for opportunities.
These are the factors which will help you to grow and improve your business in the future.
An example here could be new strategic alliances, or new technology that is going to be available
soon. Opportunities are best left till you have reviewed the Strengths, Weaknesses and
Threats. Threats are the influences which create a
risk for your business. These will usually come from your competitors or the external
influences on your business. Identifying threats helps you plan strategies to overcome them.
Examples here could include new competitors, or the uncertainty of global markets. Next, establish your priorities.
How can you use your strengths to take advantage of the opportunities identified?
How can you use these strengths to overcome the threats identified?
What do you need to do to overcome the identified weaknesses in order to take advantage of the
opportunities? How will you minimise the weaknesses to overcome
the identified threats? Once you have answered these questions and
finalised your lists, you can use the SWOT analysis to identify key issues and themes
that are crucial to achieving your business goals.