Whether you are a sales manager looking to cash in on your unique product features & make some sales – or a credit analyst trying to figure out if a certain borrower you just met is credit-worthy or not – one thing is for sure; you need to do a significant amount of research before making any major financial or business decision in life. In other words, a comprehensive analysis of all the factors that affect your business, or project, in a negative or positive way.
A SWOT Analysis is one way to do this. It is one of the most powerful planning tools used by businesses and companies during the strategic analysis of a product, project, or process. At its core, a SWOT analysis is a simple assessment matrix used to single out key (internal and external) factors that affect your standing in the market while also guiding you to more promising avenues of action for the future.
Today, we break down this popular acronym for you and share some tips on how to perform an independent SWOT analysis for your own business or project. We also introduce you to the complete range of customizable SWOT templates we offer at WordLayout, helping you save time & effort!
What’s a SWOT Analysis?
A SWOT Analysis is a strategic planning tool used by businesses to evaluate their own (or their competitors’) strengths, weaknesses, opportunities, and threats. Created by Albert Humphrey during the 1960s and 1970s, this popular business analysis method was originally based on data from Fortune 500 companies but has since been adopted by organizations of all types who use it to brainstorm and hence, facilitate the process of market research & analysis.
Note that while strengths & weaknesses are both internal factors tied to a specific organization or project, opportunities and threats are external factors existing outside and beyond the control of individual businesses or organizations. The end goal here is to match your organization’s goals, capacities, and values to the environment in which your business operates in a way that optimizes performance and fosters growth.
Use our pre-made templates to create a data-driven summary of your strengths & weaknesses, allowing you to make more informed business decisions & keep yourself motivated as a team while staying on top of market trends, alerts & future predictions.
Below, we help you identify areas of competitive edge, vulnerability, potential growth, and external risks so you have a better idea of what to discuss & review under each component of the SWOT framework:
Strengths
Here, play on what you do well, or better yet, what you do best. In other words, what competitive edge do you have over your rivals?
Here are some common strengths enjoyed by successful businesses:
- Strong brand presence
- A great corporate culture
- A loyal customer base
- Rights to new & advanced technologies
- Strong balance sheet
- High online ratings
- High website traffic
- Operational efficiencies
Whether you’re an established giant like Gucci, Nike, or Apple – or a small business owner, when mulling over your strengths, consider the following:
- What do you excel at?
- What makes your company special?
- What aspects of your company appeal to your target audience?
- Which products or product categories outperformed your rivals?
As a bulleted summary of what your company is good at, you are encouraged to use findings from this section to lure new investors, customers, or clients into buying your product or service.
Weaknesses
But as every business manager knows, running a business is not all fun and games (at least, not always!).
In a highly saturated market, there are always new competitors to watch out for or new, enabling technologies you don’t have access to. These developments can weaken your company’s relative position, giving you a competitive disadvantage to your peers.
Perhaps your brand has weakened over time, or you’re experiencing a high employee turnover, excessive debt, or a lack of staff – you need to be honest and upfront about where you lag so you can direct future actions and plans accordingly and in full knowledge & unbiased view of your position in the market.
When identifying internal weaknesses, ask yourself:
- Which products are underperforming and why?
- How do you rank against your competitors?
- What do leaving employees have to say about your company?
Opportunities
When looking for business opportunities based on what you know, it’s important to enter the room with a positive and can-do attitude. After all, you need to dream big to achieve big.
Ready to make the most of what life has to offer? For every business (new and old), there are always promising opportunities to profit from. Just like threats, opportunities are also external, existing as conditions in your environment that offer potential for positive change, growth, or success, such as:
- New Technologies: In a fast-paced & hi-tech world, there are always new, unique technologies that can help you enhance production, slash costs, or improve any other aspect of your business.
- Market Trends: Observe any overarching trends in the market; perhaps there has been a change in the way customers perceive your product or an increase in the demand for a specific product.
- Regulatory Changes: Find out if your business or project is affected by any specific legal or regulatory requirements enforced by the government. For instance, a mega-construction business might find revenue growth opportunities if the government lifted a ban on building skyscrapers.
Once you have a better sense of the most favorable external factors in your business environment, you are naturally in a better position to capitalize on changing market trends or new technologies to help your business grow and expand.
Threats
Now, think about any external factors that pose a risk to your business and its ability to operate smoothly. Remember, threats are not the same thing as weaknesses because they are external and exist beyond your control as an organization.
A threat can be anything, from new market trends to evolving social norms that make a product less attractive to consumers. Here are some common external threats faced by struggling businesses:
- Supply chain disruptions
- The rising cost of materials
- Tight labor supply
- Strained distribution lines
- Unpredictable product demand
- Regulatory changes or delays
- Emerging competitors
- Public health emergency (like COVID-19)
- Political turmoil or conflict (say, wars, protests & internet shutdowns)
It might help to ask yourself: “Where do your competitors have market share advantages?” Answering this question will give you a better sense of the relative position of your company within a highly competitive market environment.
What Does a SWOT Matrix Look Like?
Now that you have a good idea of your strengths & weaknesses as you stand, and a fair warning about any potential pitfalls or promising possibilities existing in your immediate business environment – it’s time to plot your findings in a more visual way for all to see. You can use a square divided into four quadrants, each dedicated to one element of SWOT.
When fleshing out each element, remember to be creative and think outside the box so you have a better chance of identifying any problems, risks, or delays that might otherwise go unnoticed.
Our templates are variations of this standard four-quadrant SWOT matrix with different designs and color schemes to accommodate different aesthetic preferences.
Free SWOT Analysis Templates
The templates are fully customizable, print-ready, and available for Word, Google Docs, PowerPoint, and Google Slides.
Go to Collection6 Steps of Performing a SWOT Analysis
While a preformatted document is always a great help & a time-saver, you should still know how to run a SWOT analysis from scratch and on your own. If that sounds too daunting, just hang in there and let us make the process easier for you.
Follow these 6 steps to run a complete SWOT analysis on any business plan or product idea you want to assess & evaluate:
1. Specify your objective
Be clear on what you want to achieve by running a SWOT analysis. It’s common for companies to use the SWOT framework for a very specific objective, as more value can be generated if the analysis has a focused direction.
Let’s say, you are running one to decide whether or not to perform a new product rollout. A formal SWOT analysis will (hopefully) make it easier for you to determine whether or not the product should be introduced in the market based on a rational, well-calculated assessment of factors like pricing, customer needs/demands, and market trends.
When defining goals or formulating objectives, feel free to benefit from standard goal-setting tools like the SMART framework so you can set more achievable and realistic goals for yourself.
2. Do your homework
Whether you are crafting a new marketing campaign or working on a feasibility report for a real estate project – if you haven’t done your homework, your SWOT findings will amount to nothing.
While some teams like to throw ideas on sticky notes & whiteboards, others like to give their research process a little more structure by using generic tools like a SWOT matrix.
It is also important for a company to understand what information it has access to, what data limitations it faces, and how reliable its data sources are. Remember, a company may need different data sets to support pulling together different SWOT analysis tables. For insights, check out data related to your company’s internal operations, market conditions, competitor analysis, industry trends, and customer feedback.
3. Consult the right people
In the project or business world, there’s no greater source of truth than constructive feedback. By learning from industry experts, domain experts & experienced stakeholders as well as fellow team members, you can benefit from a wide range of viewpoints.
You are advised to have the ideal mix of individual employees or stakeholders included in the analysis. While some staff members in the production or sales sectors might have a greater understanding of what is happening internally, other employees might be more connected to external factors. For each situation, you will need to identify the best people to have on board to gain the most valuable analytical insights.
4. Input data into a SWOT matrix
One of the best parts about using a SWOT analysis is how it makes it easier to get a quick visual snapshot of where your business stands and the possibilities open to you in the future. Once you have conducted your primary and secondary research, it’s time to plot your information in a SWOT Matrix; either in the form of a grid, table or chart.
A hands-all meeting is a great way to make sure you gather & document input from all relevant team members & stakeholders. The ultimate goal here is to capture as many factors or scenarios likely to affect whether a business, project or initiative can successfully achieve a specific objective or not.
5. Convert SWOT findings into action
It is now time to convert your SWOT analysis into a strategic action plan that aligns with your original objectives & goals. Remember, a SWOT analysis generally makes up only one part of a broader business analysis, often being used alongside other assessment frameworks, like PESTEL and Porter’s 5 Forces.
6. Make informed decisions & review them
Now that you have a strategic plan that plays to your strengths, takes stock of your weaknesses, seizes opportunities, and preempts threats – it’s time to ACT! Note how findings of a SWOT analysis are often synthesized to support a single decision that a company needs to make, say, whether to launch a product or not, or if you should take your supply chain global or not.
Once you’ve made an informed, evidence-based decision, you also need to review it periodically so you can tell if your decision was successful in yielding its intended outcomes.
Wrap Up
From global market research reports to individual self-assessments, a SWOT analysis is a versatile framework used to optimize internal processes and plan for future growth. Whether you are in it to gauge a company’s competitive position, respond to changing external dynamics, or assess a closed project or a new product idea – a SWOT Matrix helps you organize your thoughts & insights so you can build a more wholesome & well-rounded perspective on how things are and where they need to go!
Some words of advice: A SWOT analysis can be particularly helpful right before you implement a big change or launch a new initiative. Not only does it help you collect & collate information, but it also allows you to document concerns raised by stakeholders and visualize any patterns that arise. Plus, it serves as a quick & handy reference you can come back to any time for a little refresher.
Remember, SWOT analyses are general for a reason—so they can be applied to almost any scenario, project, or business. Our preformatted, free templates can be directly downloaded to your device as Word & PowerPoint files, or accessed via Google Slides for cloud-based editing & collaboration!
