How To Do A S.W.O.T. Analysis

by Tom Egelhoff

Your company should do a S.W.O.T. analysis at least twice a year. What is a SWOT analysis you ask?

S.W.O.T. stands for Strengths, Weaknesses, Opportunities and Threats.

In this article I'll explore each one and show you what each means to your business.

First you'll divide the four components into two sections.

Strengths and weaknesses are internal elements of the SWOT analysis and those are areas of your business that you can control in most cases.

Opportunities and threats are external elements and in most cases you will not have control over them but you have to keep them in mind for a successful business.

Next you need to look at each part individually.


Strengths

This element is easy. It's simply the things that you do well in your business.

Products and services that your business excels in. However just because you are good at something doesn't mean that you take this element for granted.

Just like we exercise to improve muscle tone you need to keep your business muscles strong and toned as well.

Your business should be constantly trying to do better.


Weaknesses

This one can also be tough for some business owners. It's not easy to admit your weaknesses.

However in the interest of business success you need to put ego aside and take a hard long objective look at your defects.

A weakness is not a bad thing unless its something you can't change. But remember I said this is one of the two elements that you have some control over.

Analyze your weaknesses and look for ways to turn them into strengths.

It may not be something you can change overnight but if it isn't - sit down and create a plan to change it to strength.

Or perhaps it's a product or service that you might not need to provide for a while or eliminate altogether.


Opportunities

The Atkins diet created a great opportunity for cheese, eggs, red meat, fish, pork and many other high protein products.

Suddenly bacon, sausage and eggs are diet food. These industries did not create this feeding frenzy.

External forces beyond their control created it but they wasted no time in capitalizing on it.

The lesson here is to not only keep up to date with what's happening in your industry but also in your community and other industries.

Opportunities can often come from some "left-field" inspiration. When an opportunity arises you need to be able to react quickly and capitalize on it.


Threats

While I am on the subject of the Atkins Diet who did it present a threat to? How about Krispy Kreme Donuts not to mention bread, cookies, potato chips, milk, yogurt, and the list goes on and on.

You might say, "No one could predict that the diet would catch on like it did." You would be right.

There was no way to prepare for this particular threat but you could look at the negatives of your product or service and be aware of areas to attack.

In the 1930's Coke had the most recognized package in the world the six-ounce swirling bottle design. There were six and a half million of these bottles in vending machines all over the country.

Pepsi decided to attack Cokes strength — its package and distribution method. Pepsi came out with the twelve-ounce bottle at the same nickel that Coke was charging.

Coke sales slumped across the country. Faced with twice as much product for the same price people chose Pepsi.

Coke not only had to enlarge their distinctive bottles and meet Pepsi's price but also retool all their vending machines that were only designed to carry the smaller bottles.

It was a very expensive threat to Coke.


The Bottom Line Of Your SWOT Analysis

As you can see there are always going to be opportunities and threats to your business.

Some will be real some will not. The movie industry was concerned that TV would empty movie houses.

Both are stronger today than they've ever been because they turned perceived weaknesses into strengths and opportunities.

Take a cold hard look at your business though the eyes of a SWOT analysis and you may find success where you never saw it before.
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