How to do SWOT Analysis

This post teaches persons how to do SWOT Analysis which is an important tool for making business and personal decisions.  SWOT is an acronym for strengths, weaknesses, opportunities and strengths. SWOT analysis is an analysis tool used to determine:

• strengths and weaknesses of businesses or persons – internal analysis
• opportunities available in the external environment to persons or businesses and threats in the external environment that can negatively affect persons and businesses.  This is external analysis

When a SWOT analysis is done of a person, it is called Personal SWOT.  My article entitled SWOT Analysis, a vital tool to Re-position Yourself  and What can be done when your dream turns to ashes before your eyes can be referenced to determine how to do and use this tool on a personal level. When it is done to determine the strengths and weaknesses of a business and the opportunities and threats in the business environment that can positively and negatively affect the business, it is called a business SWOT. Why is it important to know how to do SWOT Analysis? The environment is rapidly changing and your goals and dreams may no longer be relevant.   You may have been successful and achieved the American Dream and now in your older years, you find that what your business did is now being done by a computer.  Or you may be one of the causalities of the recession in the United States of America and many parts of the world including Trinidad and Tobago and you have lost your job and have many fixed commitments.   You have to start again and need to determine the direction to go.  Every direction you think of will require that you do a different SWOT. How to do a SWOT Analysis of your business Make a list of the Strengths of your business i.e those things make your business different from your competitors or that you do well? They include what things you have or can easily get. e.g

• Employee performance/productivity
• loyal customers, good networks
• Reputation  in the marketplace – your customers and or suppliers have a good perception of the operations of your business
• Business Profitability, or healthy cash flow and/or the  ability to finance operations
• You own significant Assets- machinery/equipment/buildings/ copyrights, patents, etc.
• Relevant and up to date training and experience of owner and/or staff/people skills
• Good Location of business
• Management and staff are experience in their various activities,
• Good products/services

Make a list of the weaknesses of your business i.e In what areas are other businesses better than your own; in which areas do you need to improve and what weaknesses do your customers and employees say you have.  The later is very important because very often we have a blind spot with regards to our business and person (Johari Window) and there may be things hid from us. Weaknesses include:

• Poor product or service
• Poor knowledge of the issues of the business sector you operate in
• Lack of family support
• Lack of business experience
• Absence of important skills
• Poor Marketing Skills
• Poor customer service
• Limited funds for operating costs and/ or business expansion
• Poor cash flow
• Poor management skills
• Poor marketing of product

Make a list of the opportunities available to your business e.g

• A new market-a new housing development comes near your business
• The opportunity to more effectively exploit the Internet- selling opportunity
• Available subsidy/business grant from government or large multinational companies operating in your area
• Changing consumer tastes that create more customer need for your product or one you can make

Make a list of the threats that are in the environment and that can negatively impact your business i.e What things can harm you or prevent you from achieving your business goals?

• New competitor comes into my market
• Loosing market share
• Increased taxes on materials you use /property and other taxes that eat into your profits
• Crime – robbery in my area- you operate in a hot spot
• Recession and its negative impact on buyer spending

Use PESTLE to determine the opportunities and threats in the environment Below is a template that you can use to do the SWOT Develop a Plan You need to determine how you can leverage your strengths to help you to achieve you objectives.Ensure that strengths etc listed, you have evidence that they are strengths and can defend your classification of them. You need to prioritize your weaknesses, given your intended direction and develop a plan to improve in those weak areas that can negatively impact your achievement of your goals. Group according to those that can be readily changed and those that are problematic to change and by the degree of negative impact on the business.  You can also look at the possibility of sourcing missing required critical skills etc.  Be honest in your assessments.  You may wish to do some more work on your weaknesses by grouping similar areas of weaknesses and trying to determine the root causes. For example high staff turnover is a symptom of something which can be poor management. You need to fix the management to fix the problem. Critically analyze your opportunities and determine those that you have the capability of positively exploiting and make a plan to exploit them. Examine the threats to your business and determine how you can mitigate their negative impact. In planning remember to Set and determine key milestone, persons who can help you, available resources – including personnel and funding, possible barriers to achieving your goals, etc. How often to do a SWOT Analysis In order to be effective, you need to use your initial SWOT to come up with some possible options for future action and having determined possible directions for yourself or business, do a SWOT of each possible option you may be thinking of exploiting e.g. If you want to become a doctor, you will have different strengths and weaknesses and opportunities and threats than if you want to become an concert singer. Throughout your life as you think of exploiting possible opportunities or of recovering from adverse circumstances, you will have to do a SWOT. How to perform a SWOT Analysis provides an example of a worked SWOT Analysis