Find out why you need a functional specification document: what it is, who is it for, and how to write one that guarantees the success of your project.
Running your own business, regardless of the size of your company and the industry you work in, comes with many challenges. You need to be committed and constantly develop your brand, there is also the risk of failure connected to various decisions. Everyone wants their companies to do well, stand out from the competition and bring not only satisfaction, but also profits. In order to achieve it, it is necessary to improve and take care of the quality of services or products provided.
One of the good practices to implement is to regularly conduct different types of analyzes, summaries and calculations. An in-depth look at your own results, strengths and weaknesses, as well as searching for new and better ways to reach the customer and gain the desired popularity, can result in an increase of the financial benefits. The business SWOT analysis is certainly a very useful method in this area.
SWOT analysis for a business – what is it?
The abbreviation SWOT comes from four English words – strengths, weaknesses, opportunities and threats. What is a SWOT analysis in business? In practice, it is basically an analysis of your business considering the above-mentioned aspects. It focuses both on internal factors, directly dependent on the firm management style, as well as external ones, which can only be influenced in an indirect and limited way. One of the greatest advantages of SWOT analysis for a company is certainly its universality and accessibility for everyone – you do not need to have specialized knowledge or any exceptional skills to be able to perform it. Following its simple and clear instructions is enough.
What are the origins of the SWOT analysis then? This type of method was introduced for the first time in the 1960s by Albert Humprey, an American businessman and management consultant. His ideas and insights sparkled the discussion and the SWOT analysis for business began to gain popularity.
How to do SWOT analysis for your business – a step by step guide
When it comes to technical issues, the most convenient and coherent way to do SWOT analysis is with the use of a special diagram. You just need to divide the page into four fields and put everything that comes to your mind with regard to the possibilities and limitations of your company at a given moment into appropriate categories. You do not need professional terminology, outstanding analytical skills and abilities to correctly conduct a SWOT analysis. You just have to be willing to take an in-depth look at the strong and weak points of your business, as well as the opportunities that lie ahead.
The SWOT analysis can help you sum up all the company processes, explore their advantages and drawbacks, as well as understand and solve any difficulties or problems that your firm is struggling with. It is recommended to perform a SWOT analysis on a regular basis, at least once a year. Now let’s go through each of the 4 categories and answer the basic question: what to include in the SWOT analysis?
Strengths – what is your company good at?
It is a category of SWOT method that is pleasant to work on. Its purpose is to reflect on and highlight everything that works in your business. It is worth considering all the aspects that allow you to stand out from the competition, what you are most proud of and what actions benefit your sales. Here you should include things like great location, good quality of products, reasonable prices, innovation, a well-coordinated team of employees, appropriate qualifications, long and rich experience, extensive industry knowledge, appropriate financial background, recognition in the industry.
Weaknesses – what is not working?
In this category you have to focus on what is not entirely going your way, what you are not satisfied with and what needs to be improved. Anything that prevents your company from developing the way you would like it to. Here are some examples of such issues: insufficient financial resources, ineffective marketing and advertising activities, lack of appropriate equipment, poor work organization, frequent changes and employee rotation. When a company has its own website or an online store with products and services, the weakness can be related to the technical side of things, for example, the website might not be intuitive and customer-friendly, which leads to users closing it right after it loads. Sometimes even small details such as colors, clear menu, or legible fonts can make a huge difference. You can find interesting information on this topic, as well as useful tips on what to avoid in our article titled what makes a bad website. Use Nopio’s consulting services if you would like to improve your online presence .
Opportunities – the potential beyond your control
You need to understand that you cannot control everything as there are many external factors that can affect your business’ success, failure, and profits. You need to pay attention to the market changes as well as your competition – there might be some new product or service you could include in your offer. In this category you should focus on events and customer tendencies that affect your industry in a positive way. For example: trends going hand in hand with demand for a given product, service, phenomenon, or closure of a competing company.
Threats – the external risks
In the last category you should focus specifically on the negative external variables that you are unable to control. What exactly are we talking about? Consumers changing their habits into those that do not favor the use of our products or services, rising unemployment, inflation, financial problems, legal changes or new competition.
What are the benefits of SWOT analysis for your business?
How can a SWOT analysis help a business? It is a good starting point for every business, especially at the beginning, as you need a strong basis, strategy and various methods that make quick development possible. Consider conducting cyclical summaries, discussions about what is good for your business, what would be profitable to work on, as well as what the current market situation looks like. Such practices are important, even if there are factors that you cannot control entirely. Thanks to SWOT, we can see all the strengths, weaknesses, opportunities, and threats in black and white. It can also inspire you to come up with new ways to further develop your company, or find out what prevents you from taking your business to the next level. This method will enable you to create a list of actions you need to take in order to create a strong brand in a given industry better, extend your target audience or keep your customers satisfied. SWOT can help you improve your strategy, goals, priorities and damage control plans. It is also a useful tool for creating business plans.
The SWOT analysis may turn out to be effective not only for companies dynamically operating on the market that have several years of experience. Entrepreneurs who are at the very beginning of setting up a company and are still looking for the right path for their business, will also benefit from this method. It can help them assess their resources, outline things that should be improved, or establish the direction in which they want to lead their company. SWOT analysis works well in all types of firms, from small, even one-person businesses, through family businesses, to large corporations and international big companies. The importance of SWOT analysis in business is supported by many studies.
SWOT analysis online business
SWOT analysis is a great solution for both traditional businesses as well as those conducted online – SWOT analysis for ecommerce business will certainly prove useful, for example, when running your own stores and websites.
Obviously, you can do the SWOT analysis on your own, for example on a piece of paper or on a white board. However, there are also some useful online tools and templates that you can use to make the entire process even more effective, readable, and easier to go back to. Those programmes also enable you to share, report, and publish your findings. What is more, you can use them to create suitable graphs, statistics and calculations. The entire analysis conducted with such a tool presents itself in an extremely refined and professional manner. The findings can be easily and quickly placed in various types of presentations, and then used during meetings and conferences. These types of tools work in a very accessible and intuitive way. They speed up the entire process of conducting analysis. It is worth noticing that the obtained effect is also certainly much more aesthetic and tailored to individual preferences.
How can a SWOT analysis help a company?
A properly and regularly conducted SWOT analysis creates great opportunities and allows you to set new priorities. You can also use it to motivate your employees by involving the entire team in this process. Together, you can analyze the strengths and weaknesses of your business, plan a strategy to overcome particular problems and further develop things that already work. SWOT is also useful when it comes to bigger problems such as potential bankruptcy or a significant deterioration of the company’s results and revenues. In some cases it can be used as the last resort. Thanks to this type of analysis, it is possible to come up with new, incredible ideas, often even leading to saving a company that was at risk of closure.
It is worth emphasizing, however, that the SWOT analysis is not only a method used to save a business that is in a difficult financial situation. Thriving, successful companies should also use it in order not to lose their position on the market.
SWOT, or TOWS?
TOWS is a modification of SWOT created in the 1980s by Harald Weinrich who was conducting research for Volkswagen. The main difference lies in the direction from which we kickoff the analysis. TOWS starts from the weaknesses, and only then determines things and processes that influence our business in a positive way. This approach is a bit more critical, which may not necessarily have a positive effect on employee morale.
It is also worth mentioning that SWOT and TOWS can be successfully used not only to improve your business but also yourself. You can use both of these methods to take a look at various parts of your life and personal problems from a different, more analytical perspective .
We hope that our small guide answered the questions on how to perform a swot analysis on a business, and showed how useful and beneficial this method is in running a successful company. Thorough analysis of strengths, weaknesses, opportunities and threats is a challenge that should be undertaken on a regular basis. Thanks to SWOT, you can identify processes that benefit or damage your company’s growth as well as determine the best development path for your business, which will allow you to achieve even more spectacular success in the future.