How to Do a SWOT Analysis on Your Small Business
Have you ever had an idea for a new revenue stream, but you’re unsure if it will work operationally, what the risks are, and how beneficial it will be for your business? It’s a dilemma many small business owners frequently face. Wouldn’t it be nice if you could easily analyze any new opportunities to see if they were worth pursuing? Fortunately, there is. It’s called a SWOT analysis. The acronym stands for strengths, weaknesses, opportunities and threats, and it enables you to thoroughly evaluate every aspect of the idea, weighing up the pros and cons deliberately and concisely. This handy business tool looks at internal and external factors and, once you’ve gone through each area, gives you an informed overview of how viable your plan is. This is how you use each section.
Strengths
Strengths relate to how your business will benefit from the idea or why you’re well set-up to make it a success. Depending on the nature of the solution, they could range from increasing sales to shortening process times, or from already having in-house experts to having access to direct transport links. Strengths are the reasons why this is an excellent next step for your business.
Weaknesses
The Weaknesses section of SWOT covers things that negatively impact your business or are a reason why you can’t implement your idea. You might not have the infrastructure, it could require a substantial investment, or you don’t have the expertise or knowledge to do it well. You can view Weaknesses as all the reasons why this solution is likely to fail given your current set-up.
Opportunities
Opportunities make you look at the broader world in which you operate. It explores macro factors that, although you have no control over them, will help a new initiative work for you. Opportunities could include legislation working in your favor, tax breaks you qualify for by changing a process, or having a pool of relevant talent available in the local area.
Threats
Threats also look at the wider environment, but at those things that threaten the success of the venture and that you have no influence over. They’re often the same as Opportunities but in reverse. Threats could be legislation working against you, direct and indirect competition, or fewer people wanting to work in your industry.
A SWOT analysis is essential to ensure the future of your business. This simple but effective tool helps you make well-informed decisions and identify risks. See the full picture and watch your business grow.
