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A SWOT analysis for small business is designed to help growing companies identify key internal and external factors that can impact their growth. A thorough SWOT analysis can provide the insights you need to position your business competitively, plan future strategies, and ultimately build a profitable business.
A truly effective and accurate SWOT analysis is data-driven, realistic, and based on fact rather than belief or assumption. Some businesses conduct a SWOT analysis when they need to develop a strategy to help meet new objectives, while others conduct them regularly to stay on top of risks and opportunities.
A SWOT analysis isn’t just an exercise for large businesses and corporations. Small businesses can use SWOT analyses to gain valuable insights to propel growth and anticipate roadblocks before they arise. The earlier small businesses implement a SWOT analysis, the quicker they can identify their biggest opportunities and challenges.
Learn more about the important of a SWOT analysis for small business owners and how to start conducting your own analysis for strategic decision-making.
A SWOT analysis is a strategic technique used to identify a business’s strengths, weaknesses, opportunities, and threats — aka SWOT. These elements are grouped into internal factors (strengths and weaknesses) and external factors (opportunities and threats). They’re then typically organized in a SWOT matrix or grid containing four quadrants — one for each element.
By identifying and analyzing these various factors through a SWOT analysis, businesses can make more informed decisions for their futures and anticipate potential risks to their growth.
Part of a small business SWOT analysis involves identifying internal factors — such as the processes, people, and assets within an organization — that could impact a successful business. These internal factors are grouped into strengths and weaknesses.
Strengths are the internal factors that can contribute to positive outcomes for your business. Your internal strengths could include what you’re currently doing well in your market, your unique selling points, your digital assets, what sets your business apart in the industry, the technology and tools you use, and the people within your team and their expertise.
A strength in SWOT analysis could be that your digital marketing team is innovative and market-leading, for example, or that your business is agile enough to respond to opportunities quickly when they occur.
To identify your business’s strengths, consider asking questions such as:
A small marketing business, for instance, might identify strengths such as its proprietary marketing software, portfolio of loyal clients, and ability to provide personalized service.
Weaknesses are the internal factors that could slow your business down, such as recurring problems and financial roadblocks. Staff churn could be a major problem, as recruitment costs time and money. Your business might also lack certain skills or necessary resources to stand out in a competitive field. A small fitness coaching business, for example, might identify weaknesses such as outstanding debts on equipment loans and outdated training processes.
To pinpoint your business’s internal weaknesses, you might ask the following questions:
Consider a SWOT analysis for small business example. A neighborhood restaurant might consider local community partnerships and branding a key strength. On the other hand, it might consider inadequate staffing or high employee turnover to be one of its greatest weaknesses.
The other part of a small business SWOT analysis involves identifying the external factors that can positively or negatively impact your business. These external factors are grouped into opportunities and threats.
It’s important to identify external opportunities that could help propel your business forward and improve your standing in the market. This might include building new digital assets, expanding your consumer base, or acquiring valuable human resources.
To identify your business’s opportunities, consider asking questions such as:
A small home decor business, for example, might see an opportunity in the growing local real estate market. Meanwhile, a small skincare business might pinpoint an opportunity to target social media users who engage with beauty-focused creators.
Equally important for your business is being aware of external threats in SWOT analysis. These are the risks and roadblocks that could slow your business down and erode your competitive advantage. Strong competitors, changes in the market, supply chain issues, and limited resources can all pose a threat to your business.
To identify your business’s threats, consider asking questions such as:
A small catering business, for example, might see a threat in rising costs from food vendors or a new local grocery store that offers event catering. Meanwhile, a small technology business might consider supply chain issues and increased competition in the market as threats to its growth.
You might also conduct a more in-depth competitive analysis to better understand the major players in your industry and your company’s position in the market. In fact, a SWOT analysis is usually conducted as part of a competitive analysis, which provides a more comprehensive overview of your direct and indirect competitors, including their sales strategies, marketing campaigns, and target audiences.
It’s important to know how to conduct a SWOT analysis for your small business. Before you get started, decide if you’re trying to meet a specific objective or if your SWOT analysis is general. If you’re developing a new product or entering a new market, a SWOT analysis will be particularly helpful, but it can also be a less specific, exploratory exercise.
Now, for the basics: A SWOT analysis is set out as a two-by-two table with four quadrants, one for each factor: strengths, weaknesses, objectives, and threats. In each quadrant, you’ll outline key SWOT analysis for small business questions, such as, “What are our top-performing products?” and “How can we keep up with changing consumer behaviors?”
Here’s a closer look at how you might conduct a SWOT analysis of a small business enterprise.
Your own understanding of your organization could be surprisingly narrow. Make sure you brainstorm with people and stakeholders throughout the business and ask for insights from those who interact with customers, design the tech, do the accounts, hire new people, and more. Only then, can you accumulate an accurate list of strengths and weaknesses.
It's up to you how you gather these insights to collect SWOT examples. You could do a company-wide survey, ask for input from team leaders, or conduct interviews and observations yourself. This is also a great way to identify employee skills and talents, which are important strengths and assets.
Both internal and external analyses are hugely strengthened by real data. It’s likely that your business produces a large amount of financial and operational data, so narrowing it down to the most illustrative sources is important. You could delve into hiring costs, social media engagement, customer demographics and locations, market share, or trend reports.
Opportunities and threats in SWOT analysis can often be found through market analysis and examination of industry trends. Market research will help you to understand changes and challenges. It can even help you uncover gaps in your market — and whether they are small or seismic. You can achieve this through focus groups, observations and ethnography, field experiments, and surveys.
Competitor analysis will help you focus on who your business key challenges are, what they’re doing well, and what their market share is. Their marketing strategies, pricing, sales strategies, and assets should also be included in this to complete a full analysis.
Conducting a SWOT analysis is only the first step to finding new ways to grow your business. Once you complete your SWOT grid, you need to analyze the information. This means the next step is to utilize customer insights you gathered and turn your business’s list of strengths, weaknesses, opportunities, and threats into actionable strategies to meet your objectives and improve customer retention. Once you’ve collected these findings, it’s also important to filter and edit them. Not everything you discover will be an immediate priority — only the most pressing threats and lucrative opportunities should be included in your final strategy.
You can turn your business’s SWOT analysis into a meaningful, measurable strategy by producing an actionable list of priorities and aligning these with a concrete timeline. This will help your business mitigate the risks and weaknesses, as well as measure progress and optimize strategies as needed.
Consider a few SWOT analysis examples for small businesses. Say your SWOT analysis reveals that competitors are going after a new audience segment that you haven’t reached yet. You can use these findings to start developing a marketing strategy to promote on social media and leverage consistent messaging for this high-value demographic.
Your SWOT analysis might also show that an underperforming product is putting a drain on your resources. It might be time to cut or adapt that product to ensure it provides a return. On the other hand, your SWOT analysis might reveal an opportunity to meet new consumer buying trends by offering multi-platform shopping experiences and buy now, pay later options at checkout.
With these insights at your fingertips, you can make more informed, data-backed decisions to help mitigate risks and drive sustainable business success.
To summarize, a SWOT analysis can be used to take stock of your business’s internal strengths and weaknesses, as well as external threats and opportunities. It can help you and your team understand what your business is doing well, what it’s struggling with, how it can grow in the future, and what could threaten its prosperity.
By fully analyzing these factors, you can unlock valuable insights and strategies to get ahead of the competition and solidify your standing in the market.
Now that you know how to perform a SWOT analysis for your small business, what first steps do you plan to take? Read on for more marketing tips and how to create a marketing strategy.
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