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What is a SWOT analysis?
Did you know that there are over 6 million private sector businesses in the UK? The Office for National Statistics reports that the number of businesses has increased by 72% over the past 20 years! In an increasingly competitive market, it is important that you innovate to ensure that your business doesn’t get left behind.
One of the greatest ways to help your business stay current is to complete regular self-assessments and industry research to inform your next actions; then use the data to identify risks and opportunities to protect and promote your business. This helps you to stay on top of your specific marketplace and grow as a business. To help you achieve this, there are many tools that can be used to analyse your business. One of which is a SWOT analysis.
So, what is a SWOT analysis? SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities and Threats. A SWOT analysis is a tool that has been used by professionals and individuals for approximately 60 years. It was invented by Albert Humphrey, who was an American business and management consultant. He created the tool during his work at the Stanford Research Institute between 1960 and 1970.
Now it is one of the most commonly used strategising tools in business. In completing a SWOT analysis, you use each of these terms to analyse the current state of your business, before making any change in strategy. This could be the starting point for your research to help you generate ideas and mitigate any challenges from arising. It will also help your business to keep performing at its best.
Understanding a SWOT analysis
The purpose of a SWOT analysis is to provide you with an accurate analysis of how your business is currently performing, as well as how it can improve. By doing this frequently, you can identify areas for change more easily, as well as set goals and create an action plan.
All of these things help businesses to stay ahead of their competition and provide a high standard of goods or services to their customers. The initial stage of a SWOT analysis is to gather information for each concept. After you have populated each area, you analyse your answers to determine your future actions. The SWOT is a tool to support you in strategising, so the analysis must still be completed manually by you and your workforce.
We have broken down the SWOT analysis below, explaining the benefit of analysing your business by each concept:
The strengths element of the SWOT should be focussed on the internal strengths of your business. You could also describe this as the strong areas of your business that are under your control. Think about what your business does better than other companies as a direct result of your internal workings.
A business strength is something that you control as a business, to stand out from your competitors (it could be referred to as your unique selling point). By analysing your business strengths, you can understand what you perform well in. Knowing this is key to decision-making as you can maximise your strengths to leverage more opportunity in your particular industry.
It is important to know your weaknesses as a business. Without a thorough understanding of this, you could easily loose custom or be overtaken by your competitors. Your weaknesses are also internal factors that are performing poorly due to your own processes.
Think of anything internal that is disrupting your business from achieving its goal. Being honest and open when considering your weaknesses will ensure that you have accounted for every possible situation that could be damaging your progress as a company.
Opportunities are external factors that could have the potential to boost your business. They are situations that are happening outside of your business that you cannot control, but that could support your business goal and serve you well. Thorough analysis of opportunities that your business may be missing can be extremely lucrative.
It can help you to stay ahead of competitors, innovate your business model, and form a basis of action planning for growth. Try to think outside the box when thinking about different opportunities. Getting ahead of an upcoming trend can sometimes be all it takes to make your business soar.
When thinking of threats for a SWOT, you should consider things that are out of the control of your business; also referred to as external threats. This is anything that happens outside of your business that could negatively impact you. You can think about current and future threats to complete the assessment and analysis of your business. It can help you to mitigate risk and overcome obstacles with minimal damage to your business.
A SWOT analysis can be used as an in-depth assessment, or to support decision-making. How far you analyse your business using the tool is up to you, which makes it extremely flexible for many scenarios. The best SWOT analyses usually come from a team effort.
Having the opinion of just one worker often results in subjective ideas from one perspective. Having input from more team members not only results in a more holistic analysis but empowers your team in decision-making by valuing their opinion. Empowering your team in this way is another key SWOT strength as it can boost morale and improve performance.
What is a SWOT analysis used for?
As we mentioned previously, a SWOT analysis can be used flexibly in a business.
Some examples of scenarios in which it could be used are:
- Strategy meetings when planning a new business direction. This could be at senior management level.
- In workforce planning to assess the size and scope of your workforce. This could include your employees’ skill level, work times and geographical locations.
- To assess business operation. Here you could analyse business tools, software, costs and process models.
- In financial planning to predict profit and loss, capital and seasonal income.
- For project management. A project manager would likely use a SWOT analysis before beginning a new project and review this during the project.
- To prepare for meetings with key stakeholders. A SWOT analysis can be used to gather information to ensure you are fully informed when working with them.
- As an informal brainstorming activity to generate new ideas and learn more about your competition.
- As a marketing tool. A SWOT analysis is a common tool used when creating a new marketing strategy. This is because marketing has a focus on understanding your competitors and showcasing your strengths to generate more business.
As well as a business environment, there are other areas that can benefit from SWOT strengths.
- Education settings – Students at schools, colleges and universities can use a SWOT analysis to assess their learning objectives.
- Personal development – A SWOT analysis can help individuals assess their own personal development to help in making decisions about their career or personal goals.
- Interview preparation – A SWOT analysis can be a great way of understanding your own strengths and weaknesses so that you are prepared to answer difficult interview questions and focus on what you excel at. You can analyse your opportunities and threats to showcase how you can use your skills in practice with awareness of your best ways of working.
Who creates a SWOT analysis?
In a business, anybody can create a SWOT analysis, but it is usually initiated by management to assess how well they are driving the business (such as a senior manager, project manager or team manager). This is because the main SWOT strength is to inform decision-making, and managers are usually the people in a business who make the decisions.
Although managers have the main oversight of the SWOT analysis, it should involve contributions from a wide range of workers in varying roles to achieve a thorough information gathering process and analysis. This is so you can achieve a holistic assessment of your company from a holistic perspective and complete the SWOT effectively.
Having a representative from all teams involved in the SWOT will help you to get well rounded information to work from. It can be created informally as a simple paper exercise to brainstorm ideas, or be captured more formally as part of a large strategic aim or project.
In some instances, your SWOT could include information gathering from outside of your organisation. This can add an additional level of analysis by looking at the viewpoint of your consumers. It can be particularly useful when deciding on a new strategy or introducing a new product or service. Marketing teams often use a SWOT analysis in this manner to confirm their decision-making and use the customer’s voice.
Another way marketing teams use a SWOT is by completing the process about their competitors. Spending time conducting research on your competitors can assist you in leading the way in your industry. You can identify gaps in your market which can be used as an opportunity in your own analysis. They can also be used to identify the relevant marketing required for your business to get noticed and stand out from the crowd.
Applying a SWOT analysis
SWOT analyses are most commonly used at the start of a change to your business (such as prior to implementing a new strategy). They can be used very simply, which is often one criticism of the tool. However, undertaking thorough information gathering from a range of sources coupled with in-depth analysis can help you decide where and how to drive your business forward.
We have included some tasks that can help you to prepare for your SWOT analysis below:
- Identify a team of people who can contribute to your SWOT analysis.
- Decide on whether you will use any external information.
- Ensure your team understand the purpose of completing your SWOT analysis. You can explain your new business or project idea to your colleagues so that they understand how their information will be analysed. This could be to introduce customer marketing, for example.
- Be open to constructive criticism when discussing weaknesses or threats.
- Take your time – you may gather a lot of information that could take a while to analyse. By utilising the whole team, you can create the best analysis to inform your future decision-making.
- A SWOT is not the only tool available to help your business decisions. It can be used in conjunction with other tools, such as a PESTLE analysis. A PESTLE analysis stands for Political, Economic, Social, Technological, Legal and Environmental. It invites you to analyse the whole environment in which you are working in to help plan your future actions.
The SWOT analysis tool is a very simple box diagram that you can populate. We have included an example below [populated with some dummy answers]:
– We use recycled materials which are more environmentally friendly.
– We do not communicate with our customers outside of transactions.
– There is marketing software available at a low cost.
– Our competitors have been marketing to their customers for some time.
To complete the SWOT analysis process, you can use the following steps to guide you:
1. Brainstorm your information as a team to explore each of the SWOT categories.
2. Add your information to the SWOT analysis tool.
3. Prioritise the most significant findings.
4. Analyse your findings to decide on next actions.
5. Report on your findings and create an action plan.
6. Delegate actions to your team.
7. Periodically review the action plan to ensure you stay on track.
8. Revisit or complete a new SWOT analysis to check your progress (this could be every 2 to 6 months).
How to do a personal SWOT analysis
A personal SWOT analysis is a great way of gaining personal insight into yourself and understanding where you excel, as well as areas of weakness. By understanding this you can excerpt yourself in your strongest areas that you will have a greater chance to succeed in.
It also helps you to manage or work on your weaknesses so that these do not negatively impact your life. By identifying your weaknesses, you can set targets to learn new skills which can boost your self-esteem and sense of purpose.
The premise of a personal SWOT analysis is similar to your business SWOT. However, instead of thinking about business, you think about your skills, qualities and attributes. The SWOT template remains the same, but you may consider different questions to gather information about yourself that you may not usually think about day to day.
Completing a personal SWOT analysis is a common form of personal reflection, as it allows you to assess yourself as an outsider. If you can think critically about yourself as a product, you will be able to achieve an in-depth analysis to help you reach your goals (whether they be in work, education or personal achievements).
You can think about the following questions when completing a personal SWOT analysis:
- What are your greatest skills?
- What qualifications do you have?
- What resources do you have?
- What do you perform well doing?
- When do you feel unconfident?
- What tasks do you usually put off?
- What do other people say your weaknesses are?
- What are your negative habits?
- Which industry or trend is growing?
- What networks are available to you?
- What tools, technology or software are available to you?
- Is there a gap in the market that you can fill using your abilities and resources?
- Who are your competitors?
- Are your skills still in demand?
- What obstacles do you face daily?
- Are your weaknesses likely to threaten your abilities if they are not resolved?
Once you have answered questions such as the above for each category, you have gathered your information. The next step would be for you to prioritise it and analyse it to determine your next actions (just as you would with the step-by-step guide for a business SWOT analysis). Then you can work through your personal action plan to make positive change in your life.
How to do a SWOT analysis of a team
A SWOT analysis is an extremely flexible tool that can even be used to analyse the performance of a team in your business. The concept of this is a combination of a business and personal SWOT analysis, as you are analysing individuals’ capabilities in line with your business goals.
This can help you to identify how you are using your resources and whether you are utilising your team most effectively. As well as ensuring your business is performing as efficiently as possible, a team SWOT can also work towards the personal development of individuals. It can allow them to unlock their potential to be better workers and increase self-confidence.
In order to conduct a team SWOT analysis, you should ensure that your team is on board and happy to contribute. Completing a SWOT analysis together invites them to have a valued contribution and build on their own self-awareness.
Your team can practise their strategic thinking skills as you go through the SWOT steps together and uncover individual strengths and weaknesses that you may not have previously known.
You can examine your team’s strengths and weaknesses and consider the following questions:
- Does your team work together well?
- Do people in your team network with others?
- Do the people in your team produce high quality work?
- Does your team respond well to change?
- How experienced are your team?
- Are your team members self-starters?
Once you have collectively discussed and agreed on your team’s internal attributes you can look outside of your workplace for the external opportunities and threats.
Consider the following:
- What training programmes are available that could upskill your team?
- What stakeholders could be contacted?
- What workflows could you adopt to improve practices?
- How stable is your budget?
- Do you have vacant positions?
- Is new software being introduced that some team members are not familiar with?
Once you have identified your external factors you can evaluate these to make positive changes to your team.
As you uncover your individual team members’ strengths and weaknesses, you can use these to the team’s advantage to improve in the following areas:
- Working together.
- Sharing knowledge and skills.
- Adopting new processes.
- Maximising opportunities.
- Minimising threats.
- Maintaining positive team morale.
How to make the best SWOT analysis
A SWOT analysis is most effective when you are beginning a new venture or assessing how to make improvements. Taking the time to research and gather information at an early stage can result in better progress being made in the future. The key to success when using this tool is honesty, so that you can take all contributions on board and complete an unbiased analysis.
The only way you can remove threats and improve on weaknesses, is if you acknowledge them and create an outcome focussed action plan to combat the risks. Completing the analysis tool alone will only offer you your subjective opinion.
As your business relies on your team and consumers, it is important to remember that their opinions matter. Gaining an authentic picture of your current affairs from multiple sources can support the most thorough strategising to drive your business to the next level.