Last updated February 29, 2024
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What is a SWOT analysis?
SWOT stands for strengths, weaknesses, opportunities, and threats.
A SWOT analysis is a strategic planning or project management tool companies use to evaluate internal and external elements of their business. They consist of four lists of the company’s strengths, weaknesses, opportunities, and threats. Its purpose is to allow a company to evaluate itself, overcome challenges, and determine new strategies for the future.
The “strengths” and “weaknesses” sections typically look at the internal factors of your business. The “opportunities” and “threats” sections analyse external factors that can help or harm your company.
The document should be an objective view of the company where everyone involved in making the SWOT can speak honestly about the state of a business.
Why is a SWOT analysis important?
SWOT analysis is valuable because it helps you pinpoint your company’s internal areas that are performing well or need improvement and external factors that can grow or harm your business. You can perform a SWOT before committing to any company action.
A SWOT analysis encourages you to take a bird’s eye view of your company, which can help make complicated issues more manageable.
SWOT analyses are typically part of a bigger Business Plan.
To perform a SWOT analysis, start by gathering a team to analyse the company. The more unique perspectives you have, the more well-rounded your SWOT will be. You don’t want to leave any stone unturned.
Next, determine the goal you want to achieve with your SWOT. You can use the document to take a macro-level view of your business or focus on a particular area. There’s no limit on the number of SWOTs a company can make, and your circumstances may warrant making more than one to cover multiple areas of your business.
Once you have a goal, create a list of questions related to your overall objective that you want answers for in each section of your SWOT. You can then use those questions to guide your research for relevant data on your company or competitors.
For example, if your company is a retail store, you may want to look into which items are selling well and poorly or maybe analyse your competitor’s marketing strategy. The information you gather will likely help you determine your company’s strengths, weaknesses, opportunities, and threats.
Once you have a pool of relevant information about your company, you can create your SWOT analysis.
How do I create a SWOT analysis?
You can easily create a SWOT analysis by filling out LawDepot's questionnaire. Using our template will ensure you complete all the necessary steps:
Step 1: State the type of business
Start your SWOT analysis by stating whether the company you’re analyzing is a new or existing business.
Step 2: Include the company name
Include the company’s name in your document. You can do a SWOT analysis for any company, whether it’s your own or a competitor's.
Step 3: List the company’s strengths
Make a list of your company’s strengths. Consider internal factors that can help your business grow or elements of the business currently succeeding.
Some questions you can ask yourself when making your list include:
- What does my company do well?
- Is my product or service unique or different?
- Do I own any intellectual property rights or proprietary technology (e.g., patents or licences)?
- Is the location of my business ideal for my target market?
- Is my pricing competitive?
- Do I provide exceptional quality?
Step 4: Create a list of the company’s weaknesses
When brainstorming your company’s weaknesses, consider internal factors that can cause your business to fail. Also, consider things your competitors may do better than your company.
Some examples of weaknesses may be:
- Cash flow problems
- Outdated technology or facilities
- Limited distribution channels
- High staff turnover
- Poor customer service
Step 5: Brainstorm a list of the company’s opportunities
Make a list of opportunities your company can seize. These are external factors that can help your business succeed.
Consider any emerging trends your company can capitalize on or competitor weaknesses you can use to your advantage. Maybe there are opportunities for partnerships with other companies or technology that you can use to your advantage. Perhaps there are government policies that could positively affect your business or areas of the market that are currently underserved.
Step 6: Make a list of the company’s threats
Think about some external factors that can cause harm to your business and list them in your SWOT analysis.
Some questions you can ask yourself when making your list include:
- Are my suppliers dependable?
- Can new competitors easily enter my market?
- Can larger competitors undercut my pricing?
- Is there a risk of new taxes?
- Will uncertain weather conditions or natural disasters significantly affect my business?
- Is there an economic decline that could affect customers' spending habits?
SWOT Analysis Example
Hillfort House Goods is a family-owned company that offers a wide selection of high-quality home goods, such as small furniture, kitchen and dining items, linen and sheets, storage solutions, and decors. Hillfort House Goods has been proudly serving the city of Bristol and surrounding areas since 2010.
Here is what its SWOT analysis looks like:
