SWOT (pronounced “swat”) analysis is one of the most useful theoretical business tools I know. I even use it for personal decision making, as well as for business. It quickly brings clarity to any decision I need to address.
What is SWOT analysis
SWOT analysis (or SWOT matrix) is a technique used in strategic planning to help identify the Strengths, Weaknesses, Opportunities and Threats of, or related to, the objective at hand, whether it be a specific project, product or service, or even the competition or marketplace. It also helps identify the internal and external factors that will impact achieving those objectives.
• “Internal” probing questions address positive attributes (strengths) and negative attributes (weaknesses). For example, if you have decades of experience in the field in which you are starting a business, then that’s definitely a strength. But if you have no prior experience with your target market, then that’s a weakness.
• “External” probing questions deal with our environment, and can be positive (opportunities) or negative (threats). For example, if you have a patent pending on a product, that’s an opportunity. But if your niche has a lot of established competition, that’s a threat.
Conducting SWOT analysis
On a whiteboard, flipchart, Google doc, etc., draw a box with four squares and label one quadrant Strengths, one Weaknesses, one Opportunities and one Threats. Then, with your objective in mind, consider each area carefully so you can get an honest “lay of the land” at the beginning of your decision making process. Ask a trusted colleague for his or her input as well to provide a different perspective.
How the 4 components can quickly help decision making
1. Forces the “rosy eyed” to acknowledge the negative
As entrepreneurs, we are emotionally connected to our ideas and shield ourselves from the inherent weaknesses in our plans, as well as the threats looming in the market. Facing those does not come naturally to me, as I’m too busy thinking through all the possibilities. But a quick SWOT analysis forces me to consider internal and external threats, preparing me to face the issues at the very core of my plans.
2. Sets you up to play to your strengths
The opposite is also true. A good startup plan can work best when we are intimately aware of our strengths and how to best play to them. Do you have subject matter expertise that few can match? Or is your market growing like wildfire? SWOT analysis helps you identify and prioritize these strengths.
3. Separates internal from external
We tend to have more control over internal attributes than external. Myself, I try to focus my energies on influencing internal factors while navigating external factors to the best of my ability. A SWOT analysis clarifies that dichotomy, helping me see what factors — good or bad — I can most influence.
4. Improves presentation of business ideas by proactively addressing nay-sayers
Personally, this is one of my favorite benefits of SWOT analysis. By addressing both positive and negative attributes of your pitch on your own terms, you get to frame the conversation more favorably. Doing so also improves your audience’s trust, as it shows you’re willing to address all issues, not just the things that make you look good.
So again, SWOT analysis does not have to be formal. I often simply jot down a quick quadrant with a list of attributes in each space, but the result is quite often clearer decision making and communication. Reach out for assistance with your SWOT analysis, or let us help fill out the roles you’d like to delegate.