The SWOT framework is a useful way of planning ahead to secure your business’s future. At every stage of growth, it’s a process to help you figure out where your business will be tomorrow and, more importantly, create a strategic plan for it.
Here’s how to create your own SWOT analysis matrix using a simple SWOT analysis template.
What is a SWOT analysis?
A SWOT analysis is a graphical representation of the internal and external factors that impact a business strategy. SWOT stands for “strengths, weaknesses, opportunities, and threats.” Each of those four elements occupies its own quadrant in a simple matrix.
Businesses use SWOT analyses as a strategic planning tool to evaluate new ideas, anticipate challenges, and improve existing business models. Individuals can conduct a personal SWOT analysis to prepare for a career change or set personal goals.
SWOT analysis example
Here’s a sample SWOT matrix for an online tailored-shirt business. Although many more factors can come up during brainstorming, in this example, these were deemed to be the most important.
Strengths
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Weaknesses
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Opportunities
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Threats
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Study SWOT analysis examples to get ideas for business strategies you can implement. Remember, there are no right or wrong answers here.
Why is SWOT analysis important?
If you’re starting a new business, a SWOT analysis can help you decide on a business model and understand your market position. It will inform your break-even analysis and give a more realistic picture of what you’re signing up for. And if you’re looking for startup financing, investors will expect to see a SWOT analysis in your business plan.
Existing businesses should perform a SWOT analysis once a year. Think of it as your annual State of the Business. An annual SWOT analysis can help your existing business:
- Anticipate problems
- Work on necessary changes or improvements
- Invest in smarter initiatives throughout the year
- Develop new product lines or services
How to do a SWOT analysis
You can do a quick SWOT analysis with a pen on the back of a napkin when inspiration strikes, or use an editable SWOT analysis template to create a professional-looking document you can share with team members or potential investors.
You don’t have to fill out the quadrants in any particular order, but you should include at least three bullet points for each. Here are some prompts and examples to help you get started:
Strengths
Strengths are the positive attributes, resources, and capabilities a business possesses. These are the factors that give a business a competitive advantage.
To identify your organization’s strengths, ask yourself:
- What does our business do well?
- What resources do we have?
- What advantages do we have over our competitors?
Some examples of a company’s strengths include:
- Technical expertise
- Strong brand recognition
- Efficient supply chain
Weaknesses
Weaknesses are the areas where a business is lacking or could improve. These are the factors that may put a business at a competitive disadvantage.
To identify internal weaknesses, ask yourself:
- What areas could our business improve in?
- Where are we lacking resources or capabilities?
- What are our competitors doing better than us?
Some examples of a company’s weaknesses include:
- Limited market presence
- Outdated technology
- Poor customer service
Opportunities
Opportunities are external factors a business can capitalize on to grow or improve its performance. They can result from changes in the market, technology advancements, app modernization, or competitive landscape.
To identify opportunities, ask yourself:
- What emerging market trends or technologies could benefit our business?
- Are there any gaps in the market that we could fill?
- Are there any new markets that we could enter?
Another effective strategy for identifying opportunities is by conducting a gap analysis.
Some examples of opportunities include:
- Expansion into new markets
- Acquisition of a competitor
- Adoption of new technology to improve operations
Threats
Threats are factors in the external environment that could negatively impact a business’s performance or success. These can include changes in the market, competitive landscape, or regulatory environment.
A PEST analysis is another strategic management tool you can use to specifically understand the external forces that impact your business. A PEST analysis breaks external threats down into political, economic, social, and technological factors.
To identify external threats, ask yourself:
- What external factors could harm our business?
- Are there any new competitors entering the market?
- Are there any regulatory changes that could negatively impact our business?
Some examples of threats include:
- Increased competition
- Economic downturns
- Changes in consumer preferences
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SWOT analysis FAQ
What is SWOT analysis and examples?
A comprehensive SWOT analysis covers a business’s strengths, weaknesses, opportunities, and threats. For example, a tailored shirt company’s strength could be fast turnaround on orders due to local manufacturing, a weakness might be customers don’t know how to take their own accurate measurements, an opportunity would be to improve the measurement-taking process, and a threat could be competitors undercutting prices.
What are the elements of SWOT analysis?
A SWOT analysis examines internal factors (strengths and weaknesses) alongside external factors (opportunities and threats). Each of these four internal and external factors occupies a quadrant in the SWOT matrix. SWOT templates typically include a four-quadrant matrix, sometimes with prompts to aid in your SWOT analyses.
How do I use a SWOT analysis?
There are many ways to use a SWOT analysis, such as evaluating a business model for a new venture or strategic planning for an existing business. Fill out a business SWOT analysis template and use it to quickly compare the impact of internal versus external factors on business performance.
How do I write a SWOT analysis?
To write a SWOT analysis, create a matrix with four quadrants, labeling them “Strengths,” “Weaknesses,” “Opportunities,” and “Threats,” or fill out a SWOT analysis template, like the one linked in this article. List relevant factors in each quadrant and use these insights to develop strategies that leverage internal strengths, address weaknesses, capitalize on external opportunities, and mitigate threats.