How to Do SWOT Analysis for Your Business
SWOT Analysis Is the Swiss Army Knife of Business Planning Tools
What is SWOT Analysis?
SWOT analysis is a simple planning tool that compares strengths and weaknesses with opportunities and threats to create an action plan.
Strengths and weaknesses are internal to the business or individual being analyzed while opportunities and threats are external factors.
While SWOT analysis can be used for personal development, it's most commonly used as a business planning tool.
I call SWOT analysis the Swiss army knife of business planning tools because it can be used for so many different planning purposes. For small businesses, for instance, SWOT analysis can be used for:
- a nice quick way to examine a small business idea
- as a springboard for annual business planning
- as the basis of a marketing action plan
- as a starting point for business contingency planning
- as a tool for involving staff/employees in business planning – e.g. solving particular problems or achieving particular business goals
- as a self-evaluation tool for how you're doing managing staff or running your business
How to Do a SWOT Analysis
1) Prepare a table such as the one you see at the end of this article.
2) Fill in the boxes, according to the specific purpose of your SWOT analysis.
3) Once you have the table complete, use it to create a strategy or strategies that will make your business more competitive.
I like to use these questions as a thinking/discussion guide:
- Do strengths open any opportunities?
- How can we convert weaknesses to strengths?
- What do we have to do to use opportunities?
- How do we best neutralize threats?
Don't forget to write the answers to these questions down!
As you'll see in my SWOT Example, I also like to write down the purpose of my SWOT analysis to help me stay focused and add a short results section at the end which tells what the next step or steps are.
Other SWOT Examples
(Note that these SWOT analyses are overviews of these particular companies, not SWOT analyses that focus on a particular aspect of a business’s operations, as mine does.)
SWOT Analysis Tips
Always choose a specific purpose for your SWOT analysis. Otherwise, you'll just end up with a bunch of generalizations that won’t provide any direction for an action plan.
Realize that SWOT analysis is a subjective process; different groups of people may come up with different SWOT analyses for the same stated purpose or a single person may come up with different SWOT analyses for the same stated topic at a different time.
For this reason, SWOT analysis is not the be-all and end-all of business planning; it's best as a planning starting point for small businesses and/or used in conjunction with other business planning tools, such as PEST analysis which "can help to ensure that you don't overlook external factors, such as new government regulations, or technological changes in your industry" when looking at opportunities and threats.
The Origin of SWOT Analysis
The creation of SWOT analysis is usually credited to Albert S. Humphrey who led a research project based upon the United States' Fortune 500 companies in the 1960s through 1970s at Stanford University. This is, however, a matter of debate. For more information on the origins of SWOT, see The History of SWOT Analysis.
SWOT Analysis Matrix
|Positive Factors||Negative Factors|