7 Simple Ways How To Write the Ultimate SWOT Analysis

So you have a huge decision to make for your business?

What a great time to do a SWOT Analysis!  

The purpose of a SWOT Analysis is to help make strategic business decisions.  If done correctly, it breaks down a complex decision into simple terms.

Let’s break it down a bit.

SWOT Analysis Explained

Okay, so what is the meaning of SWOT Analysis?  Let’s start with the basics of the acronym:

S: Strengths

W: Weaknesses

O: Opportunities

T: Threats

The first half of the analysis is focused on the internal business.  What are the strengths of the business?  What are the weaknesses of the business?  

The second half of a SWOT Analysis focuses on the business environment: the industry, competitors, and market as a whole.  What business opportunities are presented in the market?  What threats are there to the market as a whole?

These answers form the basis for the entire analysis.

What is the Importance of a SWOT Analysis?

Before we get to the steps of how to do a SWOT Analysis, let’s talk about why and when you would want to do one.

The main purpose of a SWOT Analysis is to break down each part of the business and make the decision making and strategic planning process smoother.

A SWOT Analysis helps you think through every aspect of the business environment so you can make an informed strategic decision.

Hoping to open a new product line? Do a SWOT Analysis.

Need to reallocate resources to your existing departments? Do a SWOT Analysis.

New laws coming out affecting your industry? Do a SWOT Analysis.

The importance of a SWOT Analysis is not only to identify business opportunities, but also to protect against business threats.  

Are there any Disadvantages to a SWOT Analysis?

As with any strategic planning tool, there are some disadvantages of a SWOT Analysis.

The main disadvantage that I have seen many times is the over-reliance on the SWOT Analysis.

This is a great tool to use, but oftentimes business owners get hyperfocused on the items listed in the SWOT Analysis (particularly the negative items, threats and weaknesses) and fail to come to a decision at all.

Another disadvantage of a SWOT Analysis is the reliance on the knowledge of the person performing the analysis.  Of course, if you don’t identify the different factors correctly, there is no way the analysis can help.

You know what they say, crap in, crap out.  

Same applies here.

It’s also critical to remain true to the business’ mission while making decisions.  That can easily be overlooked when doing a SWOT Analysis.  

So, let’s get to the good stuff…

How to Write a SWOT Analysis

Let’s go through how to write a SWOT Analysis step by step.

#1 Identify the Business’ Strengths

The first step in a SWOT Analysis is identifying the business’ strengths.  Remember in this step is focusing internally on the business.  List out the things that truly set this business apart.  

Perhaps the business has great cash flows or great brand recognition.  Maybe the social media team has positioned the business with a loyal following.  These are all strengths of the business.

Don’t have a business yet? Find examples of business ideas here!

#2 Determine the Business’ Weaknesses

The next step is to determine the business’ internal weaknesses.  This is often a tough one for businesses to admit.  Every business has shortcomings.  Identifying those faults and understanding them is crucial to understanding the business and making strategic decisions.  

For example, if the business was reliant on one singular product, it would be a huge strategic risk to change the packaging for that product.

#3 Pinpoint Opportunities in the Industry

For the next two items, we switch our focus outside of the business and instead look at the industry as a whole. In this step, you will analyze opportunities that have arisen in the market.  An opportunity is a change in the business environment that opens the door to new offerings.  The competitive landscape is constantly changing, so constantly looking for new opportunities will set a business apart for the rest.  

An example of an opportunity: A government has recently opened its borders to increased tourism.  This creates an opportunity for businesses that cater to tourists.

#4 Analyze Threats to the Industry

The next step (and no, it isn’t the last step) in a SWOT Analysis is analyzing the threats to the industry.  Similar to opportunities, there are always changing threats in a business environment.  Keeping a close eye on all aspects of the competitive environment will help prepare your business from any new threats.  

An example of a threat is legislation affecting the industry.  For example, the marijuana industry right now faces major threats of prohibition due to federal laws.  It’s important for these businesses to keep a close eye on laws as they continue to change.

#5 Clinch Opportunities

Now that you have actually done the list steps, it’s time to use that data.  For this step, look at your strengths and opportunities.  

Ask yourself, “how can my strengths help me seize an opportunity in the market?”

Example: A well-known brand name can use its notoriety to start a new branch in a new industry that is increasing in popularity.

#6 Overcome Weaknesses

The next step is to protect your business against its weaknesses by using opportunities in the market.  When a business overcomes its biggest obstacles, it is better positioned to make strategic moves.

An example of how a business can overcome its weaknesses using opportunities in the market: A local flower shop’s weakness is that it only has one location.  A new development in the next town over has presented an opportunity for expansion with no competitors in the area.  The business opens a new store in the business district and doubles its customer base.

# 7 Protect Against Threats

Finally, a major part of strategic planning is to protect the business against external threats.  After you have identified the threats, look to your strengths and see how you can leverage those to protect yourself from threats.  This not only helps to identify how you can protect against threats, but it also clearly outlines the strengths that you need to really focus on in order to remain competitive in your industry.

Example: A company can use its brand recognition and social media presence to protect against new competitors entering the market at a rapid rate.

Implementing Your SWOT Analysis

Whew, we did it!  

You now know how to do a SWOT Analysis and how to use it to make strategic decisions in your business.  

When you break it down, a SWOT Analysis is not as difficult as you’d think.  

But it’s oh so important!

Using the SWOT Analysis along with other analytical tools in your business will help guide you through the most difficult decisions.  

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Stephanie Yarbrough

Stephanie Yarbrough

Business Strategist

Hi! I’m Stephanie, small business strategist, business planning superhero, and owner of Portage Consulting.  I live for hiking and snow skiing ...oh, and helping small business and startups develop growth strategies and achieve financial success.

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Author
Stephanie Yarbrough

Stephanie Yarbrough

Business Strategist

Hi! I’m Stephanie, small business strategist, business planning superhero, and owner of Portage Consulting.  I live for hiking and snow skiing ...oh, and helping small business and startups develop growth strategies and achieve financial success.

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