Effective management of a business requires you to identify the strengths to exploit and the weaknesses to work on. A company must also understand the opportunities available and threats that may compromise its capabilities, and that is what SWOT analysis is all about. SWOT is an acronym for strengths, weaknesses, opportunities and threats. A proper SWOT analysis allows the management of an enterprise to identify several factors that contribute heavily towards its performance. Every small business must learn how to carry out a SWOT analysis adequately to benefit from its outcomes. The analysis is conducted in four phases, each representing an element of the SWOT matrix. A company’s specific objectives will dictate the questions to ask, they include:
This factor is internal because it relates to the company itself. These are the attributes that reflect positively on the organisation, which the management can manipulate for the interest of the enterprise.
- What resources do you have?
- How do you leverage the competition?
- What are your unique offerings?
- Where is your business most profitable?
These factors cut into the bottom-line and you have to fix them to improve the business.
- Which company areas are not profitable?
- Where do you need to improve?
- What are some of the limitations that your business faces
- Where is your company bleeding money?
These external positive attributes present a company with platforms to grow.
- What technologies can you use in your business?
- Are there new audiences you can market to?
- Is there a chance to do more?
- Are there positive market changes you can capitalise on?
These factors are external and pose risks to your enterprise, which is why you need a strategy to handle them.
- What is your existing competition doing differently?
- Is there a shift in industry regulation that could affect the business?
- Are there new products that are creating new competition for your brand?
SWOT analysis gives insights into where a company lies and what it is capable of achieving in the future.