An important step in developing a business plan is to establish your company’s strengths, weaknesses, market opportunities and threats through a SWOT analysis. This is a very simple process that can provide very deep understanding of the potential and critical issues that can affect your business.
The main purpose of the SWOT analysis is to identify and assign each factor, positive or negative, to one of the four categories, allowing you to look at your business from an objective viewpoint. The SWOT analysis is a valuable tool in developing and confirming your goals and setting out your marketing strategy.
The “S” in SWOT refers to strengths, those positive attributes that make your business a valuable competitor. Basically, this part responds to the question “What advantages do you have over the competition?”In this category, you should evaluate capital, equipment, credit, established customers, distribution channels, patents, information and processing systems and other valuables aspects of your business.
Strengths capture the positive internal aspects of your business and add value and also give you an edge over the competition. This is an opportunity for you to remind yourself the true value of your business.
Your business weaknesses consist of factors that are under your control, but prevent you from obtaining or maintain a competitive quality. What areas should be improved?Weaknesses might include lack of expertise, limited resources, lack of access to technology, poor location of your business, poor services. The good news is that these factors are under your control and improving them will make you achieve your marketing objectives.
Weaknesses capture the negative aspects of your business, which diminish the value that you offer or place you in a competitive disadvantage. These are areas that you need to improve in order to compete with the strongest players on the market.The more accurately you identify your weaknesses, the more valuable the SWOT analysis will be for your business.
So, strengths and weaknesses have to do with your business and what you offer, while opportunities and threats are related to the market.
This part evaluates the external factors that constitute the reason for the existence and prosperity of your business. What opportunities exist in your market, or around you, from which you hope to benefit?
These opportunities reflect the potential that you can achieve by implementing your marketing strategies. Opportunities may result from market growth, a change in lifestyle, resolving problems associated with the current situations, a positive perception of your business in the market and the ability to provide a higher value which will create a high demand for your services. If relevant, think of opportunities in terms of time. An opportunity is something constant or a temporary situation?
What factors are potential threats to your business? Threats include factors beyond your control that could put your marketing strategy, and even your business, in a position of risk. These external factors you are not able to control, but you can predict them that if you have an emergency plan and you are fully aware of the business trends in your market. This means you always have to be informed and thank God you have access to some of the best business websites that bring you relevant information, news and thorough analysis.
A threat is a challenge created by an unfavorable trend that could lead to the decrease in earnings or profits. Competition - existing or potential - is always a threat. Other threats may include increased prices by suppliers, governmental regulation, economic failure, negative effect of media, and a change in consumer behavior that might reduce sales or introduction to more advanced technologies that might make certain products or services obsolete. What situations might threaten your marketing efforts?
In terms of scope, a SWOT analysis is not limited to business. It can be used in the process of decision making, whether we are talking about a business, NGO, government agency or individual. The SWOT analysis is also used in the proactive management of crisis situations and to develop recommendations in a feasibility study.