How to Do a SWOT Analysis for Your Small Business (with Examples)
- Posted by Trevor Weitzel
- On January 26, 2021
From small-scale projects to your organization as a whole, a SWOT analysis can be a highly effective and valuable tool for virtually any application. Offering a detailed picture of both potential and performance, it can be a smart method of evaluation for many different purposes.
If you’ve spent some time working in a corporate office environment, you may be familiar with the term “SWOT analysis;” otherwise, it may be a completely foreign concept to you. But don’t assume that the concept of conducting a SWOT analysis is one that should stay within the four walls of a corporate office.
Actually, just about anyone in a leadership position (for a company, department team, or even a short-term project) can put a SWOT analysis to excellent use.
For the V Digital Services team, SWOT analyses are a major part of how we do our work and tackle projects of all sizes and types. And for many of our clients, a single SWOT analysis has proved to be a key to unlock a better plan for future growth and success.
But before you can start using this tool for your own business or project, you’re going to need to know more about it. First, we’ll start with the basics of what a SWOT analysis actually is, and then we’ll cover how to do a SWOT analysis and even walk you through some SWOT analysis examples. By the time you’re done reading this guide, you’ll be well-prepared to put everything you’ve learned into practice.
What is SWOT Analysis?
First and foremost, let’s get the most important question out of the way: what is a SWOT analysis?
A SWOT analysis is a specific technique you can use to assess a project or even your organization as a whole. Its purpose is to determine the Strengths, Weaknesses, Opportunities, and Threats (SWOT) of whatever you are assessing.
Because a SWOT analysis is such a flexible concept, it can be applied in many different scenarios. One of the most common ways to use a SWOT analysis is to evaluate a business at the organizational level as a means of measuring how closely it is aligned with its success benchmarks and growth trajectories.
However, it’s an equally-productive tool for measuring the performance of a specific project, such as a digital marketing campaign, comparing it to initial goals and projections.
Breaking SWOT Down into Bite-Sized Bits
We’ve covered that SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats, but what do each of those actually mean? Understanding the larger concept of SWOT analysis means grasping each element on an individual level, so let’s take a deep dive into each of the four parts now.
The very first piece of a SWOT analysis is Strengths, which is fairly self-explanatory. The Strengths captured in a SWOT analysis could be of the more abstract variety (such as your organization’s well-established brand attributes) or something more concrete (like the attractive value proposition of a new product).
Other examples of Strengths for a SWOT analysis include:
- Specific qualities that set your company apart from competitors
- Things that you know your company does particularly well
- Internal resources, such as skilled team members
- Tangible assets, such as your business capital, proprietary technologies, or intellectual property
After determining what you’re good at, it’s time to take a closer look at the parts that could use some work: weaknesses. This is perhaps the piece of a SWOT analysis that is the most challenging because it requires a certain level of honesty and self-awareness. However, it’s also a vital part of making the most of the tool. Weaknesses can include budgetary constraints or even broad organizational challenges such as untrained staff.
Other examples of Weaknesses for a SWOT analysis include:
- Limitations on resources
- Things or characteristics your organization is lacking
- Ways in which your competitors outperform you
- Unclear or poor-selling proposition
Once you’ve covered Weaknesses, it’s time to take a turn towards the positive. Look for growth opportunities, like a soon-to-be debuted marketing strategy that will help you reach new markets. Another opportunity could be an unmanageable number of leads coming in from successful marketing efforts. In some cases, Opportunities are disguised as challenges – but they’re actually chances to increase success, grow the company, or advance your organizational goals.
Some other examples of Opportunities for a SWOT analysis include:
- Untapped markets in need of a specific product or service you can offer
- A growing need for your products or services
- Positive media/press coverage of your company
- Low competition within your niche in your area
The final category or element of a SWOT analysis encompasses anything that could pose a risk to your company or its success: Threats. The various ways in which Threats take shape can vary, depending on a multitude of factors. But ultimately, the one thing all Threats have in common is the potential to jeopardize your vision for the future.
A few examples of Threats for a SWOT analysis include:
- An increase in competition
- Market volatility
- Negative media/press coverage of your company
- A shift in a regulatory environment that applies to your company
- A change in customer attitudes towards or perception of your company
Internal and External Factors
Although the four parts noted above are the typical foundation of all SWOT analysis, many organizations also choose to be even more specific by organizing the elements into two separate categories: Internal and External.
Strengths and Weaknesses are most commonly placed under the umbrella of Internal factors because they are usually the direct result of decisions within the control of your team or organization. For example, if one of your SWOT analysis Weaknesses is a high churn rate, that is within the Internal category because your organization can control it. In contrast, a Threat such as an emerging competitor is usually outside your realm of control, making it External.
The basic breakdown of Internal vs. External looks like this:
- Strengths: Internal, positive
- Weaknesses: Internal, negative
- Opportunities: External, positive
- Threats: External, negative
Frequently, an organization will develop strategies to cover the overlaps between Internal and External factors. For example:
- Strength-Opportunity strategies: Which strengths can you utilize (and how) to maximize identified opportunities?
- Strength-Threats strategies: Which strengths can you use (and how) to reduce or avoid the identified threats?
- Weakness-Opportunity strategies: Using your opportunities, what action(s) can you take to minimize weaknesses?
- Weakness-Threats strategies: How can you minimize your weaknesses to reduce the identified threats?
SWOT analyses are also referred to as IE matrices or Internal-External Analyses. You aren’t necessarily required to put the primary elements into subcategories, and a SWOT analysis can still be extremely helpful without this step. However, it can be a useful method for establishing strategies for moving forward, as well as pinpointing exactly how much control you can exercise over a specific problem.
How a SWOT Analysis is Done
Now that you’re prepared with a basic understanding of the definition of a SWOT analysis, you’re ready for the next step: learning how to conduct a SWOT analysis.
You can take many different approaches to structure a SWOT analysis, but getting started looks the same regardless – with a series of questions. To determine each element of the analysis, you’ll need to work through a variety of questions that help you zero in on the specific topic. We’ll walk you through example SWOT analysis questions for each of the four elements so that you have a helpful framework for your first – and future – attempts.
Strengths can sometimes be the easiest to pinpoint, simply because they are often the most apparent. But even if you think you can quickly list off different strengths, working through some quality questions can help you think on a deeper level.
Here are a few ideas:
- What are your brand’s most positive attributes?
- What do your customers love most about your products, services, or brand?
- What can your company do better than others in your industry?
- What resources does your company have that your competitors do not?
- What is your unique value proposition?
A similar principle can be used to generate a list of weaknesses.
Some example questions:
- What do your customers dislike about your products, services, or brand?
- What are your brand’s most negative attributes?
- What resources do competitors have that your organization does not?
- If customers cancel/churn, why?
- What complaints come up most frequently in negative feedback?
- What are the biggest obstacles in your currently-existing sales funnel?
- What could your company do better?
A Quick Note: Why Finding Strengths and Weaknesses is Usually Easier
As you build a list of strengths and weaknesses for a SWOT analysis, you might find yourself thinking that the process is extremely simple thus far. However, this is due in part to the fact that both strengths and weaknesses are internal factors, making them easier to pinpoint. Because opportunities and threats are external factors, finding them often requires increased effort and a greater amount of data.
That’s not to say that you should feel intimidated to make a move to opportunities and threats. Just be aware that these lists won’t be as quick to construct and that you may want to be prepared to do some in-depth research on industry trends, competitor activity, and other topics.
The opportunity aspect of a SWOT analysis can often be an uplifting part of the exercise because it starts to uncover the numerous routes your project or organization has towards growth.
Some of the questions you can ask yourself to determine opportunities include:
- Are there tools or resources that we are not using to their full potential?
- What kind of messaging or branding resonates most with our target customers?
- In what ways can we continue to engage with our brand advocates?
- Which of our processes (customer support, sales, onboarding, etc.) can we improve, and how?
While you can absolutely use thoughtful questions to unearth potential threats, they’re usually not that difficult to identify. In fact, it’s likely that you are already well-aware of the threats facing a project or your business.
Threats are most commonly external (new competitors), but they can sometimes be internal (high staff turnover).
PEST Analysis and How They Relate to SWOT Analysis
When you’re discussing SWOT analysis, you may hear another type of analysis come up as well: the PEST analysis. In terms of SWOT analysis vs. PEST analysis, it’s not necessarily a conversation of one being better than the other. In reality, they are both highly useful tools. However, a PEST analysis can serve as a complementary tool to a SWOT analysis in many cases.
For example, consider SWOT analysis threats such as market volatility or shifts in regulatory policies. External factors like these are highly nuanced and usually involve a huge number of individual factors. For this reason, a SWOT analysis may not be in-depth enough to assess threats like these. As a result, many organizations conduct PEST analysis alongside SWOT analysis for a more comprehensive result.
What is PEST Analysis?
Like a SWOT analysis, PEST analysis is based on four elements: Political, Economic, Sociocultural, and Technological. But notice that unlike the SWOT analysis, PEST analysis is only concerned with external factors.
Here are some examples of the factors that can fall under each of the four parts of a PEST analysis:
- Political: Laws, foreign investment, security, IPR copyright, stability, labor regulations, policies, human rights
- Economic: GDP per Capita, growth, interest rate, inflation rate, exchange rate, consumer confidence, stability, trade balance, purchasing power party, balance of payment
- Social: Demography, education, human development index, lifestyle/social culture, sociology, social safety and benefits
- Technological: Innovation, R&D, technological development, skilled resources, information/communication, acceptance of new technologies
Many of the same factors that show up in a PEST analysis can prove to be relevant to opportunities and threats assessed in a SWOT analysis. Additionally, challenges measured in a PEST analysis are typically stretched over a longer timeframe, making them more significant. For these reasons and others, SWOT and PEST analysis are commonly conducted simultaneously.
While you can construct an immediate, actionable plan using SWOT analysis, a PEST analysis can serve as the basis for long-term strategies.
Do I Need to Conduct a SWOT Analysis?
At first glance, SWOT analyses might seem better-suited to large corporations, but small businesses and organizations (as well as marketers) can reap equal benefits. There is absolutely a certain level of investment involved in creating a SWOT analysis, but the payoff is usually more than worth it – even for a very small company.
First, a comprehensive SWOT analysis is an outstanding way to gain insight into your business operations. For a small business owner, it’s easy to become focused on the day-to-day. But when you’re constantly zeroed in on the minute details, you lose out on the benefits of getting a big picture perspective. With a SWOT analysis, you can take a step back and see a broad view of your business, as well as the place it holds in your industry.
Additionally, SWOT analysis can also be advantageous for use in smaller-scale scenarios, such as gauging the strengths and weaknesses of an upcoming content project or advertising campaign.
Finally, the purpose of a SWOT analysis goes beyond listing strengths, weaknesses, opportunities, and threats. It’s also intended to give you a chance to map out tangible strategies for solutions. From understanding hiring needs to constructing budgetary plans, SWOT analyses are a handy tactic for strategic planning.
How to Do a SWOT Analysis for Your Brand or Project
Now, you know just about everything needed to get started with a SWOT analysis of your own – so let’s do a practice run to put your knowledge to the test.
We’ve come up with a fictional, family-owned restaurant located in an urban community for our example SWOT analysis. Using this imaginary eatery, we’ll walk you through each step of the SWOT analysis, so you can get a minute-by-minute illustration of how a SWOT analysis works.
The Four Quadrants of a SWOT Analysis
You can set up your SWOT analysis however you’d like. However, the most common approach is to outline the analysis in a matrix with four quadrants, one for each of the four elements. Using this presentation makes it easy to see which elements are internal vs. external and also delivers the data in an easy-to-read format.
Using the matrix approach, here’s an example of a SWOT analysis for our fictional family restaurant:
With the matrix above, you can clearly see each of the SWOT analysis elements at a glance. The format makes it easy to deduce the biggest threats and opportunities for the restaurant, as well as its most notable strengths and weaknesses.
How to Use a SWOT Analysis
Completing a SWOT analysis isn’t enough; you have to actually put the information into practice in order for it to be a useful process. While a SWOT analysis can help you see your organization or project from a completely new perspective, acting upon it can take you to the next level of efficacy.
There are two key stages of action to take after a SWOT analysis:
- Align your strengths with your opportunities
- Look for ways to convert weaknesses into strengths
Using our fictional restaurant as an example again, let’s walk through using a SWOT analysis.
Solidifying Your Strengths
Your list of strengths tells you what’s working for your company and highlights the positive things that you’re already doing. Essentially, the goal is to do more of what is already working and make the most of what you’re good at.
For example, our imaginary restaurant had the strengths of a great location, solid community reputation, and a seasonal, locally-sourced menu. For the family that owns the restaurant, this is a clear indication of what they should do next: nurture existing community relationships, develop new ones with customers, and build upon the widely popular seasonal menu.
Tackling Your Weaknesses
It’s tricky enough to generate a good list of weaknesses for a SWOT analysis because it means being brutally honest with yourself. And it can get even more challenging when it comes time to act upon your weaknesses.
Let’s go back to our fictional restaurant: because the family-owned business has a modest budget for advertising and limited reach, they struggle to compete against chains in many ways. Nevertheless, the family restaurant does have its advantages – for example, they can build meaningful relationships with their customers, which is something a large chain cannot. So, while they may not have a large advertising budget, the family restaurant has the benefit of community word-of-mouth in a way that a chain restaurant simply doesn’t.
Taking Advantage of Opportunities
When you look at the opportunities section of a SWOT analysis, it’s usually easy to see plenty of actionable steps. Once you’ve found potential opportunities for your business to grow to succeed, you’ve established a virtual series of targets to begin aiming for immediately.
Let’s look at the opportunities for the SWOT analysis for our family restaurant. One of the opportunities was to grow interest and conversation surrounding their use of local ingredients. Using locally-sourced ingredients is a major strength but shouldn’t be a stopping point. For example, the restaurant can create an opportunity by taking a more aggressive approach to sourcing locally-grown produce or focus on making it a major attribute of their brand.
Because many threats are external factors, it can be difficult to mitigate them. In some situations, it may be virtually impossible to exert any level of control over the threats – after all, that’s why they’re considered external.
For example, our restaurant is threatened by rising costs. But there is also some overlap in their opportunities and threats. One of their opportunities was to source more local ingredients, which could be an effective solution to reduce the threat of climbing expenses, at least somewhat. When you do your own SWOT analysis, keep an eye out for crossover areas like this one – it could be an excellent chance to seize an opportunity while you simultaneously handle a threat.
Connect with V Digital Services to Put Your SWOT Analysis into Action
Ready to seize your opportunities, mitigate threats, and make the most of what you’ve learned with a SWOT analysis? V Digital Services is here to help you get started with an action plan that combines your SWOT results and effective digital marketing and content strategies.
Learn more about how we can help you utilize your SWOT analysis to expand, grow, and build your company by contacting V Digital Services today.
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