How to do a SWOT analysis
A SWOT analysis is very helpful for businesses. It allows you to delve into your product or service’s Strengths, Weaknesses, Opportunities and Threats (SWOT). You should do this analysis before starting your own business, launching a new product or if you have an existing product but the market has changed.
By exploring your product’s weaknesses, you will be able to eliminate or minimise threats and by identifying your product’s strengths, you’ll be able to find opportunities.
Strengths and weaknesses relate to your product or company while threats and opportunities relate to the external environment, like legal regulations and economic setting.
Start your SWOT analysis by answering these questions:
Consider your strengths from an internal perspective as well as from your customers’ point of view. Also consider your product’s strengths in relation to your competitors. For example, if all your competitors sell a quality product, quality isn’t a strength for your product. It must show how it’s superior to your competitors’ products:
- What advantages does your product have?
- What does it do better than any other product on the market?
- What unique or lowest-cost resources can you use that others can't?
- What do people in your market see as your product’s strengths?
- What factors will contribute to a sale?
- What is the product’s Unique Selling Proposition (USP) – the unique thing that you can offer that your competitors can’t?
Similarly to strengths, look at this from an internal and a customer point of view and in relation to your competitors. The most difficult part of this will be to be objective so try to include other people when doing this analysis:
- What could you improve?
- What should you avoid?
- What are people in your market likely to see as weaknesses?
- What factors would result in you losing a sale?
Opportunities refer to the environment in which your product will exist.
- What good opportunities can you see (partnerships, leverage, resources, etc)?
- What interesting market trends are you aware of?
- Are there changes in technology or the market that will create opportunities for your product?
- Any changes in government policy that you will benefit from?
- Are there any local events that could benefit your product?
Threats refer to the environment in which your product will exist.
- What obstacles do you face?
- What are your competitors doing?
- Are quality standards or specifications for your product changing?
- Is changing technology threatening your product’s existence?
- Are expected costs prohibitive?
- Are government, legal or industry regulations not conducive for your product?
When you have the answers to all these questions, sit down and seriously consider what it all means for your product and your business. Put plans in place to counter threats and to take advantage of opportunities.