Ever heard of SWOT analysis? 🤨

Businesses of all sizes can use this strategic planning tool to figure out their strengths and weaknesses. But that’s not all, because this analytical framework will also help uncover opportunities and threats in your industry.

All-in-all, it's a great way to get a better understanding of the internal and external factors that can impact your org.

Trust me, whether you're a small business owner or a big-time manager, understanding SWOT can be a game-changer for achieving your goals and growing your bottom line. 💰

In this article, we'll be breaking down:

Let’s go. 🕶️

What is a SWOT analysis?

The four major elements of a SWOT analysis are easy to remember, since each is a part of the SWOT acronym:

  • Strengths
  • Weaknesses
  • Opportunities
  • Threats

SWOT is a framework for identifying and analyzing the strengths and weaknesses, opportunities, and threats of any competitive entity. That goes for organizations, products, and individuals.

Wait… individuals?! 🤯

Yep, you can run a SWOT analysis on yourself to understand and shape where your career is headed. Very handy for staying a few steps ahead of other candidates during your next job search.

The goals of SWOT analysis

There are a ton of benefits to performing a SWOT analysis. Most often, though, the SWOT framework is used by businesses when they want to better understand how strong their position is in the competitive landscape.

Regularly performing a competitive SWOT analysis and taking stock of where your business (or product) is strong or weak versus competitors keeps you in tune with the wants and needs of the market. That means it’s harder to drift off course and start selling stuff no one really wants. 😮‍💨

Being aware of opportunities and threats, too, sets you up to make better strategic business decisions down the line. You’ll be well-prepared next time you perform a market opportunity analysis and, whether it’s your marketing strategy or your product development roadmap, you’ll know how to move defensively or offensively as best befits your business.

How to perform a SWOT analysis

The primary goal of any SWOT analysis, then, is to take stock of your position in the marketplace, and to inform business strategies.

SWOT analysis does this by drawing out the internal and external factors that can influence success or failure in your business.

Do this, and you’ll have yourself a successful SWOT analysis.

Internal and external factors

Standard practice groups your strengths and weaknesses as internal factors, while the external elements of SWOT analysis are the opportunities and threats. You’re over here, they’re over there.

That means, while you’re doing your SWOT analysis, you look at the strengths and weaknesses of your own products and processes. Opportunities and threats arise from the industry and are apart from your business.

More important than this black and white divide, though, is that you have useful data at the end of the process. This means doing a thorough analysis that covers all bases.

We’ll get to that in a minute. ⏱️

State of SWOT Report

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  • The five top challenges you face performing SWOT, and how to solve them.
  • The best ways to measure success or failure post-SWOT.
  • Whether SWOT is falling out of favor in modern businesses.
  • The best alternative frameworks and how they compare with SWOT.
  • The future of SWOT analysis.
Grab your copy

SWOT vs TOWS

TOWS (threats, opportunities, weaknesses, strengths) analysis has you perform the SWOT “steps” in reverse. By focusing on the external environment, and its opportunities and threats first, you gain a different perspective on the market and your place in it, which means more informed business decisions.

But why not just consider every aspect from every angle the first time you conduct the analysis?

Here’s what we suggest:

1️⃣ Consider the strengths and weaknesses of your competitors (external), as well as of your own business or product (internal).

2️⃣ Consider the opportunities and threats that exist within your own business (internal), as well as from externals that you have no control over (external).

Being thorough, rather than adhering to strict rules about the “right” and “wrong” ways of doing the analysis, will net you the best results.

The SWOT analysis process

💡
Remember: there’s a supposed divide between internal and external factors, but a comprehensive analysis will consider all angles.

Here’s how it’s done.

You’ll learn all about strengths and weaknesses, both internal and external, from conversations with customers, as well as from the candid opinions of your colleagues.

You’ll begin taking action around internal opportunities and threats by speaking with people inside your business. External opportunities and threats are seized or remedied by dealing with those outside your business.

Here are some example questions to help you fill each quadrant in your SWOT analysis template:

Strengths

Internal (your strengths)

  • What does your product do better than anyone else’s?
  • Where are you outperforming your competitors?
  • What features do you have that competitors lack?

External (the strengths of others)

  • What do customers prefer about competitor products?
  • What area is your biggest competitor strongest in?
  • What features have competitors implemented better than you?

Weaknesses

Internal (your weaknesses)

  • Where could your internal processes improve?
  • Are there places you’re falling behind the competition?
  • What do customers dislike about your product or service?
  • Do you have a problem with churn?

External (the weaknesses of others)

  • From your conversations with customers, where do they think competitors let themselves down?
  • Do key competitors have any particularly weak features?
  • Do they fail to offer a quality experience for their customers?

Opportunities

Internal opportunities

  • What unfilled customer needs could your product begin to fill with a low-investment tweak or update?
  • Are you making the most of internal ideas, opinions, experience, and talent?
  • Do incentive structures adequately reflect the few core goals of the business and effectively drive growth in those areas?

External opportunities

  • Are there gaps in the market you’re in a good position to fill?
  • Could you move part of your operation overseas where rates, terms, or taxes are more favorable?
  • Can you forge contracts with suppliers to create more favorable terms if none exist already?

Threats

Internal threats

  • Are your internal processes efficient enough?
  • Do staff members lack the necessary time to perform key duties?
  • Are you exposed to ‘person-risk’?
✏️
Person risk: If one or two key people left the business, would you still function just fine? Could someone else take over? Are this person’s skills vetted on a regular basis?

External threats

  • Has a new competitor just entered the market?
  • Is growth in your industry slowing or declining?
  • Does the socio-economic situation have negative implications?
  • Do consumer trends imply weakening demand for solutions like yours?

PEST analysis

When it comes to market factors that could affect your business, the PEST analysis framework is a useful tool for identifying such external opportunities and threats.

PEST stands for political, economic, socio-cultural, and technological factors. There are variations on the PEST framework, each with increasingly odd names (PESTLE, STEEPLE, LONGPESTLE). But the standard PEST analysis will get you thinking along the right lines all on its own.

State of SWOT Report

Download your copy to learn...

  • The five top challenges you face performing SWOT, and how to solve them.
  • The best ways to measure success or failure post-SWOT.
  • Whether SWOT is falling out of favor in modern businesses.
  • The best alternative frameworks and how they compare with SWOT.
  • The future of SWOT analysis.
Grab your copy

Challenges of SWOT analysis

SWOT analysis is a great tool, but it’s not perfect. Perhaps that’s why it’s so divisive? 🤔

Here’s a shortlist of some of SWOT’s key challenges.

SWOT analyses use a lot of resources

Since the conclusions from a good SWOT analysis will go on to influence the future of the business thanks to the strategic decisions they’ll inform, it’s important to get it right. ❗️

That means you can’t rush. A thorough SWOT analysis, performed well, can take a long time to complete. Especially if your business is large.

It’s critical to pull input from all corners of the business to ensure no stone is left unturned. While people are sat in a meeting room contributing to the SWOT analysis, though, they’re not getting on with other work that needs doing. In other words, there’s a resource-cost to performing the analysis. One that’ll touch every department by the time you’re done.

Successful SWOT analysis needs the right company culture

If your company culture isn’t right, people won’t feel comfortable being candid with their opinions. Even once you’ve got them away from their desks and into the meeting room where they can contribute.

Want your SWOT analysis to be successful? Then your people need to feel comfortable sharing their opinions on the weaknesses of your business and products.

Tough to swallow? Bad news - you’ll need to hear their opinions on what competitors are doing well (threats), too. So they’ll need to feel comfortable sharing those.

Radical Transparency

This is what Ray Dalio calls “radical transparency”. In his book “Principles”, he talks about how important it is that everyone be “radically transparent about everything, including mistakes and weaknesses” since this “helps create the understanding that leads to improvements”.

It’s not always easy to be honest. Actually, it’s pretty difficult. But being honest and open, rather than dishonestly mute, puts the demons in the firing line. Those demons that sit in the shadows, that everyone knows are there, just waiting to cause the destruction of your business, but are too scary for most to turn and look at directly.

With the right culture, you can tear down those hidden harbingers of destruction, but it takes an understanding that honesty isn’t personal. That it comes from a mutual place of wanting the business to be better for everyone’s benefit.

SWOT is time-consuming

Going from the ‘data-gathering’ stage, where you’re collecting opinions and insights, through the implementation stage, to actually seeing results, can take a long time.

Even once all the work is done, communicating back to initial stakeholders how the project played out, what the results were, and how it paid dividends on their initial time investment is important. That’s super challenging for time-starved project leaders and members of the C-suite, though.

What’s more, since the SWOT process does take time to play out, the competitive landscape may have shifted significantly by the time your strategic planning has borne fruit.

📁
Wondering how to apply SWOT analysis in project management? Check out our comprehensive guide. 👆

SWOT is hard to make truly objective

The best SWOT analyses don’t just consider the strengths and weaknesses of their own brand and products. They consider the strengths and weaknesses of competitors, too.

But they also recognize the danger of bias. ☝️

Businesses can become echo chambers for their own ideas and opinions. Especially if no one’s doing the work to make sure the culture supports radical transparency and that it stays that way.

That’s why it’s important to speak directly to the market itself. Yup, we’re talking about your customers and wider target audience.

Talk to your customers.

There’s no substitute for speaking directly to customers and getting them to tell you exactly what it is they love about a competing product, or exactly why they churned, or what attracted them to you in the first place.

It gives you a rock solid understanding of where you’re strong, where you could do better, and what needs they have that no vendor has been able to meet for them yet (hint: these are golden opportunities).

The issue, of course, is that SWOT is already all too easy to turn into a resource hog. Now, we’re suggesting you expend even more resources on it.

How to move forward.

That’s why, if we’ve one tip for conducting successful SWOT analyses, it’s to define a hard budget and timeline for them at the start, and to be aggressive. Then cut both by 20%.

If you end up shooting slightly over, you’ll have worked in some buffer in terms of both time and cost. Therefore, you won’t have to abandon the project as a sunk cost and write SWOT off as a complete waste of time and money.

Get SWOT right, see it through to the end, and you’ll uncover golden insights that’ll inform near on every strategic aspect of your role.

Download the State of SWOT Report

We had far more questions about SWOT analysis for our survey-takers.

🎯 Which SWOT applications offer the best ROI?

👍 How do you measure the success or failure of a SWOT analysis?

🔮 What does the future hold for SWOT analysis? And how do you overcome its inherent challenges?

Want to dig deeper into the reasons why modern attitudes towards SWOT are the way they are? Want to read the real comments and opinions of practitioners to learn how to improve your own application of strategic frameworks in your business?

Grab your no-cost copy of the report today and upgrade your competitive intelligence toolkit. 🧰