The SWOT analysis is critical for sustaining your small business as business process automation would. Unfortunately, several small business owners think SWOT analysis is for business analysts and economists alone.
However, SWOT analysis is essential for optimizing your small business, especially if you hope to diversify or expand your business structures. Whether you are just starting or are an experienced entrepreneur, you need the SWOT analysis to make the most of your venture.
This blog post will enlighten you on all you need to know concerning SWOT analysis. Also, you will learn what it is, and how to apply it to your small business. So here is all you need to know!
What is the SWOT Analysis?
The SWOT analysis is a systematic approach to analyzing the current state of your business. In addition, it helps you make future analyses for more profitability. It works by helping you see the truth about your business’s present condition, analyzing your strengths, weaknesses, opportunities, and threats. Essentially, it gives you an overall picture of all internal and external factors that influence your business. In this way, you can maximize your strengths and opportunities while minimizing your weaknesses and threats.
Several human resources professionals utilize the SWOT analysis for recruitment, onboarding, and business management. Similarly, you can exploit the information from conducting a SWOT analysis to channel your business energy in the right direction— strength, and opportunities. Several businesses use it as a strategy to stay afloat in the industry and survive the massive competition.
When should you conduct a SWOT Analysis?
Ideally, you should conduct a SWOT analysis at the start of your business or before launching/ going public. After the initial investigation, you should update it for your small business every year. Perhaps at the start of the year or the end as a form of evaluation.
Before conducting your SWOT analysis, you need to do relevant market research. Essentially, you need to be up to date with the latest happenings in the industry.
For instance, if your competitors have switched to generating online pay stubs for their employees or generating online invoices for customers, you might consider it a factor during your study. It could be a potential threat to your business’s survival. Also, relevant business data like financial documents; your 1099 forms as an entrepreneur can assist you in your analysis.
What does the SWOT Analysis mean as an activity?
Since SWOT is an acronym, you need to know what it means in detail. This way, you can conduct an effective and seamless analysis for the growth of your small business.
Here is a brief outline:
Your business strength refers to all internal factors that highlight the best part of your business. Also, it talks about the positive things about your business and its potential to continue thriving. Essentially, your business strengths are those elements that put your business ahead of the competition or your competitive advantage. Additionally, it is that which makes your business stand out. Your business strength can be tangible or intangible.
Examples of business strengths include but are not limited to:
- Employee strength
- Talented workers
- Automation and high-quality machinery
- Customer service
- Quality business service
- Unique or original products
- Effective branding and advertising
- lower prices etc.
Your business weaknesses are all limiting factors that keep it below your competitors. They are also internal factors affecting your business productivity. Knowing your business weakness will give you a blueprint to fix things. Also, your business weakness could be tangible or intangible.
Here are some examples of business weaknesses:
- Minimal profits
- High production cost
- Poor quality control
- Manual business processes
- Inefficient workers
- Poor marketing, etc.
Opportunities refer to the external factors that could benefit your business, help you stand out, and remain ahead of the competition. Generally, business opportunities depend on the market or the industry. Essentially it would help if you were on the lookout for options you can utilize for your small business to grow.
An excellent way to spot good business opportunities is to look at or follow the events outside your company. Business trends also provide excellent sources of options. Opportunities are either permanent or temporary.
Here are good outlets for business opportunities:
- Online business opportunities
- Social media presence
- Market trends
Threats are equally external factors that can stifle your business growth. Sometimes, they are permanent; other times, they are temporary. Threats are not always within your control. However, the earlier you spot them, the better you can take steps to mitigate them. A flexible business management strategy is vital to manage your threats and convert them to opportunities.
Here are a few examples of business threats:
- Natural disaster
- Fierce competitors
- Market decline
How to apply SWOT Analysis for your small business?
It is one thing to know about the SWOT analysis. But, it is another thing to understand how to apply it to your small business. So here is a way to use it.
Set up a template for your investigation
A typical template is a four-quadrant design with the four business components you need to analyze separately. So, you operate this template by carefully listing out all aspects of your business. In this way, you can critically expose your business processes to objective scrutiny and solution. Alternatively, you can download a standard template online and work with it.
Get your workers involved.
It would be best if you did not neglect your workers when doing a SWOT analysis. The reason is that your employees can be very resourceful during such meetings. They can highlight the company’s strengths, weaknesses, opportunities, and threats that will shock you. Also, remember that employees form a functional system of the company’s sustainability. They operate the machines, relate with clients or customers, and are in touch with periodic trends in the industry. Therefore, you can reduce the meeting to a small set of people like your marketing team or the entire staff.
Utilize the results from your analysis
The whole idea of conducting a SWOT analysis for your small business is to use it. Essentially, your SWOT analysis helps you fine-tune your business operations and plans. However, because the factors affecting swot analysis are dynamic, you should regularly conduct the investigation—perhaps annually.
Benefits of SWOT Analysis
Here is how this analysis benefits your small business:
- Encourages business objectivity and focus
- It makes the company prepared for eventualities
- Highlights business strong points
Even though you can conduct the swot analysis for your business independently. But, you can equally get a professional to handle it. Several HR professionals are handy for helping businesses with their swot analysis.
FAQS: How can a business use SWOT analysis?
How can a business use SWOT analysis?
Businesses use SWOT analysis when trying to optimize their strategy. For instance, the analysis helps them maximize their strengths, minimize their weaknesses, take advantage of opportunities and reduce threats to their business survival.
Can you do a SWOT analysis of yourself?
A SWOT analysis of yourself is a personal analysis where you highlight your attributes. It’s an essential personal improvement strategy. However, it would help if you were as honest as possible with yourself to do a personal analysis.
What are the opportunities for a small business?
Small business opportunities can be direct or indirect. They are any chances that foster small business expansion and flourishing. So, examples include but are not limited to government grants, career coaching, online access, corporate loans, social media marketing, etc.