How to conduct a SWOT analysis of your business and competitors
SWOT analysis is one of the most popular and oldest business planning tools. Developed in the 1960s, the acronym stands for Strengths, Weaknesses, Opportunities and Threats.
And it pretty much does what it says on the box.
Identifying the major factors in each of these four categories – as they relate to your business – will help clarify strategies to boost your business performance.
Conducting a SWOT analysis on your major competitors too will give you further insight to your market position.
The first two categories – Strength and Weakness – relate specifically to internal factors, while Opportunities and Threats have external focus.
A SWOT audit is usually the first step in a `health check’, repositioning or expansion of a company.
And its beauty lies in its simplicity.
You don’t need specialised equipment or skills, so everyone from rookie business owners to large corporations can use it effectively.
While business owners can complete a SWOT analysis on their own, it’s recommended you include staff in an initial brainstorming session, or consult them when a draft has been completed.
Everyone will have blind spots and insights into different areas of the business, so consultation is key.
You will want to be able to condense the information down to a single sheet, so you can view the lists of Strength, Weakness, Opportunities and Threats alongside each other in columns.
This will help you spot any important correlations between Strengths and Opportunities, or more concerningly, between Weaknesses and Threats.
For example, your weakness may be a lack of off-street parking and the threat may be increasing congestion or development around your site.
Looking for this interplay between the columns will help highlight areas of strength you can exploit or areas of weakness you need to work on or guard against threat. Once the analysis is complete it should inform a strategic planning discussion.
Tips and questions
SWOT or TOWS?: There’s much debate in the business community about whether you should tackle external factors – Threats and Opportunities – before the inward focused Strengths and Weaknesses.
Some argue the original order is best reversed (TOWS), to prevent discussions getting bogged down in debate about the company’s relative strengths and weaknesses. People are often better able to agree on external threats and opportunities, which can then inform discussion of your internal skills and shortcomings.
Bring in a pro: Brainstorming sessions required for processes such as SWOT can run off the rails if not moderated effectively. Consider hiring an experienced hand to help facilitate discussion, limit frustration and try to ensure no one is offended during discussions about internal strengths and weaknesses.
Join your competitors: Make sure you are on your competitor’s mailing list and follow them on social media. This will help you keep up to date on any new offerings and allow you more insight if you plan to do a SWOT analysis on them. Keep an eye on their online feedback and any accessible social media metrics.
Put your thinking hats on: When the SWOT audit is complete, you can bring in some creative thinking techniques, such as Edward de Bono’s 6 Thinking Hats, to prompt discussion on future strategies.
Big or small: You can apply a SWOT analysis as broadly or specifically as you like to any area of your business operation. Involving staff in a SWOT analysis on your website may be a useful exercise.
- What do we do well?
- What advantages do we have over others?
- What do our customers like about us?
- What don’t we do well?
- What do customers complain about?
- What frustrates staff about this company?
- What are the industry trends?
- Is there a gap in the market?
- Is there something customers frequently request?
- Have customers complained about another business?
- Are there any potential disruptors in the industry?
- Why would customers favour disruptors?
- Is our location popular/easily accessible?
- What are your competitors focused on? What do people like about them?