As a small business owner, do you know your business's strengths, weaknesses, opportunities, and threats? Whether you are a new or established organization, you must understand this critical component of marketing strategy. SWOT-analysis helps accomplish all of this.
SWOT analysis for small business is vital and a robust process that evaluates your company and enables your future business decision-making.
According to Oberlo, more than 50% of small enterprises fail during the first year of operation, and over 95% of small startups fail within the first five years.
Before we get into the meat of the article, let us take a quick look at a few critical components. To begin, let us define SWOT analysis.
What Exactly Is A SWOT Analysis?
SWOT analysis is an approach that acts as an analytical tool to assess your business's performance or build a business strategy for any startup
SWOT analysis comprises "Strength, weakness, opportunities, and threats. In addition, SWOT analysis includes both internal and external factors. Internal factors are those that businesses can control, and external factors are outside business control.
In the 1960s, Albert Humphrey of Stanford Research Institute created the swot-analysis method. Since then, this method has become one of the most valuable tools for business owners to start and grow their companies.
"A SWOT analysis allows you to identify the areas you could be focusing on to grow your business. You can use this insight to inform your long-term strategic planning, which will help you to draw up budgetary plans and identify hiring needs."
- Brad Touesnard, Founder & CEO of SpinupWP
A simple rule to follow is to create a SWOT analysis for small businesses when you are starting one and revise your SWOT annually. A SWOT analysis is conducted for an entire business organization or an individual project within the organization. SWOT analysis is often applied at the organizational level to accurately determine business alignment with its business goals and success benchmarks.
Why Do Small Businesses Require SWOT Analysis?
"It is impossible to accurately map out a small business's future without first evaluating it from all angles, which includes an exhaustive look at all internal and external resources and threats, and a SWOT accomplishes this in four straightforward steps that even rookie business owners can understand and embrace."
- Bonnie Taylor, chief marketing strategist, CCS Innovations
Unaware of a small business's strengths and shortcomings is a significant loss for the owners. It is essential for small business owners, as well, to anticipate both opportunities and threats.
Benefits of SWOT analysis for small businesses:
Gain a better grasp of your business
Ward off potential threats
Capitalize on opportunities
Leverage your strengths
Establish company objectives and ways for achieving them
Breakdown of SWOT Analysis:
Strengths are the areas in which your business excels and enhances your business's success. Therefore, determining the strength of small businesses is a crucial aspect of the organization.
The following is a list of potential company strengths to consider:
What are your strengths?
What distinguishes your business?
What do customers appreciate about your business, product, or service?
In what areas does your business excel?
Consider a fictitious example of typical SWOT strength - a cake shop at the neighborhood market. The business may have several advantages, including outstanding taste, unique flavors, bespoke cakes, and helpful staff. These are only a handful of its benefits and can be highly beneficial in the long run.
Weaknesses of a small business are another consideration to be looked at carefully. Additionally, weakness is a modifiable or controllable internal aspect of the firm. The following is a list of your business's vulnerabilities.
Your company's weaknesses
Limited money and resources
No online presence (website)
No market plan
Opportunities are business opportunities that exist outside of your organization and that you can take advantage of to make money. You cannot influence opportunities; they are determined by industry or market conditions. However, opportunities assist you in increasing your sales. The following are a few business opportunities:
Is there any new market that is easy for your product or service
Lack of competitive areas
Is there any demand for your product
What are the possibilities of market growth
Social media presence
Threats are the final component of the SWOT analysis but are critical. Threats are external variables that can jeopardize the running of your organization. Recognizing and averting these dangers can save you a lot of money and time in the long run. There are a few threats to consider.
Changing customer needs
A new competitor with a low price
Negative press coverage of your business
New laws and regulations
How to Conduct SWOT Analysis?
Once you have a firm grasp on all four categories of SWOT analysis, you can go on to the next phase of posing a few questions that will assist you in developing a well-structured business plan for future growth. You will be able to weigh the advantages and disadvantages of your business initiative or organization.
Once you've completed SWOT analysis for small businesses and gathered all of the results, analyze each in terms of company requirements.
With the compiled information, you will be able to:
Create a plan that can enhance your strength as a small business
You can work over the weaknesses of a small business.
Utilize your strengths to be well prepared to diminish threats
Can take a deeper understanding of weaknesses and opportunities and identify the areas of improvement
Establishes a clear path for small businesses to challenge their competitors' marketing efforts and grow their consumer base
Once you learn the art of SWOT analysis and get well-versed with it, you will plan your business strategically. In addition, you will be able to explore new opportunities
and improve your decision-making process.
Amazon Success Story – SWOT analysis
Amazon recently recognized the retail industry's
limitations through SWOT analysis and stretched its borders to a more deconstructed form. Along with cloud computing and intelligent voice
, Amazon reached out to third-party platforms such as suppliers and logistics to test the waters in the film and television sector. As a result, the company's business strategy is broadening. In 2008, Amazon began offering original material on Prime Instant Video, the company's mainstream media video platform available to Prime subscribers. It has done so by attracting new users and accelerating the growth of e-commerce and other new enterprises.
As illustrated in the preceding example, SWOT analysis for small businesses is a complete strategy for the growth and expansion of a corporation. We live in a competitive business world, where new business possibilities and risks emerge daily. As a result, corporate entities must perform it and analyze their strengths and weaknesses to prosper in the new normal and beyond.
Why do we conduct a SWOT analysis?
A SWOT analysis of a business organization identifies areas for improvement and areas of strength. A SWOT analysis paints a comprehensive picture of a business's strengths, weaknesses, opportunities, and threats.
When should a business conduct a SWOT analysis?
SWOT analysis is essential before taking up any new business activities, considering expansion or modification, taking up any new initiatives, changing internal policies, changing the business plan or strategy, and many more.
How often should we conduct a SWOT analysis?
Threats and opportunities are inherently dynamic. A SWOT analysis is done every six months according to established corporate standards. However, it should be considered before embarking on any new company venture. It would be best to do it regularly, depending on your business's needs.