When you work in a corporate setting, you’ve likely encountered the term “SWOT analysis.” Don’t worry, it’s not about evaluating tactical police units but rather about taking a deep dive into your company’s status.
Whether your team consists of two or 500 individuals, a SWOT analysis is a great method to assess your company or project. This article will guide you through the concept of a SWOT analysis, illustrate it with examples, and provide tips for conducting your own. You’ll also discover how to utilize the data from a SWOT analysis to enhance your internal procedures and workflows. And guess what? You’ll even get a free, customizable SWOT analysis template!
SWOT Analysis: A Comprehensive Guide
Table of Contents
- What is a SWOT analysis?
- Understanding the SWOT analysis definition
- How to perform a SWOT analysis
- SWOT analysis questions
- PEST analysis
- Benefits of SWOT analysis for small businesses
- A complete SWOT analysis example
- Taking action based on your results
- Free SWOT analysis template
What Does a SWOT Analysis Entail?
A SWOT analysis is a method used to identify and clearly define your Strengths, Weaknesses, Opportunities, and Threats—hence, SWOT.
SWOT analyses are versatile and can be used to analyze an entire company or organization, or they can focus on individual projects within a specific department. Organizational-level SWOT analyses are most common and help determine the alignment of a business with its growth objectives and success metrics. However, they can also be used to evaluate the performance of a specific project—such as an online advertising campaign—against its initial goals.
Regardless of what you call them, SWOT analyses are often visually represented as a grid-like matrix with four distinct sections—one for each element. This type of presentation has several advantages. For example, it helps to differentiate between internal and external elements and displays a wide range of data in an easily digestible, primarily visual format, much like these SWOT templates.
Understanding the SWOT Analysis Definition
While we know that SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, what do these elements actually mean? Let’s break down each element individually.
Strengths
The first element we’ll examine in a SWOT analysis is Strengths.
- Aspects your company excels at
- Qualities that give you a competitive edge
- Internal resources like a skilled and knowledgeable workforce
- Tangible assets such as intellectual property, capital, proprietary technologies, etc.
As you might have guessed, this element focuses on the aspects that your company or project excels at. These strengths can be intangible, like your company’s brand attributes, or more concrete, like the unique selling proposition of a particular product line. Strengths can also be your people—your human resources—such as strong leadership or a highly skilled engineering team.
Weaknesses
After identifying your strengths, it’s essential to turn that same critical self-awareness towards your weaknesses.
- Areas where your company falls short
- Areas where competitors outperform you
- Limitations in resources
- An ambiguous or unclear unique selling proposition
What obstacles are hindering your business or project? This element can encompass organizational challenges, such as a lack of skilled personnel or financial and budgetary constraints. Weaknesses can also include areas where your company lags behind competitors within your industry, such as lacking a well-defined USP in a saturated market.
Opportunities
Next, let’s explore Opportunities.
- Untapped markets for specific products
- Minimal competition in your area of operation
- Emerging needs for your products or services
- Favorable press/media coverage of your company
Is your marketing team generating more leads than you can handle? That’s an opportunity. Is your company developing a groundbreaking innovation that will open doors to new markets or demographics? That’s another opportunity.
Simply put, this element of a SWOT analysis encompasses everything you could do to boost sales, expand as a company, or advance your organization’s overall mission.
Threats
The final element of a SWOT analysis is Threats—anything that could potentially pose a risk to your company or its potential for success and growth.
- New competitors entering the market
- Shifts in the regulatory landscape
- Negative press/media coverage
- Evolving customer attitudes towards your company
Threats can include new competitors emerging, changes in regulatory laws, financial uncertainties, and essentially anything that could jeopardize the future of your company or a specific project.
Free Guide >> The 30 Best Ways to Promote Your BusinessInternal and External Factors in SWOT Analysis
While all SWOT analyses share the four elements discussed above, many companies further categorize these elements into two subgroups: Internal and External.
Internal Factors
Strengths and Weaknesses typically fall under internal factors as they usually result from organizational decisions that your company or team has control over. For instance, a high customer churn rate would be a weakness, but since improving it is within your control, it’s an internal factor.
External Factors
Conversely, the emergence of new competitors would be classified as a threat in a SWOT analysis. However, since your control over this factor is limited, it’s an external factor. This distinction explains why SWOT analyses are sometimes referred to as Internal-External Analyses or IE matrices.
Image via Bplans
While categorizing your four primary elements into Internal and External factors isn’t mandatory for a successful SWOT analysis, it can be helpful for determining your next steps or evaluating the level of control you have over a particular challenge or opportunity.
Now that we have a clear understanding of each element within a SWOT analysis, let’s explore the process of creating and conducting one.
Conducting a SWOT Analysis: A Step-by-Step Guide
For a comprehensive walkthrough, you can refer to our video below, and while this entire post is dedicated to answering this question, here’s a simplified guide on how to do a SWOT analysis:
- Assemble your team—having treats on hand is always a plus.
- Set up your quadrants—use a whiteboard or projector (our template could come in handy!).
- Begin with strengths—work your way through the list of questions below.
- Follow the same process for weaknesses, opportunities, and threats.
- Compile the gathered information into a well-organized document.
- Distribute it to the team along with relevant notes.
- Schedule a follow-up meeting to brainstorm action items and assign ownership.
Guiding Questions for Your SWOT Analysis
Much like feature-benefit matrices, SWOT analyses can be conducted in various ways. However, no matter how you structure your analysis, it’s essential to start by asking the right questions. Here’s a breakdown of the questions you should aim to answer during your SWOT analysis.
Questions to Uncover Strengths
Let’s begin with our first element, Strengths. To determine your organization’s strengths, you can start by pondering the following questions:
- What aspects of your company or product(s) do your customers appreciate the most?
- In what areas does your company outshine other companies within your industry?
- What are the most positive attributes associated with your brand?
- What is your unique selling proposition?
- What resources do you have that your competitors lack?
Answering these questions will provide a strong foundation for identifying and listing your organization’s strengths.
Positive brand attributes associated with nexus-security, as identified by our customers
Questions to Identify Weaknesses
We can apply the same principle to pinpoint your company’s weaknesses:
- What do customers find unfavorable about your company or product(s)?
- What problems or complaints frequently appear in your negative reviews?
- What factors contribute to customer cancellations or churn?
- What aspects of your company could be improved?
- What are the most negative attributes associated with your brand?
- What are the primary hurdles or bottlenecks within your current sales funnel?
- What resources do your competitors possess that you lack?
You might notice that pinpointing your organization or project’s strengths and weaknesses is generally easier and quicker than identifying the opportunities and threats it faces. As mentioned earlier, this is because strengths and weaknesses are internal factors. On the other hand, external factors, such as opportunities and threats, often demand more effort and rely on more data because they tend to lie outside your immediate sphere of influence.
Questions to Explore Opportunities
Identifying opportunities and threats might require conducting thorough competitive intelligence research to understand your competitors’ activities or examining broader economic and business trends that could impact your company. However, this doesn’t mean that opportunities and threats can’t be internal. You might uncover opportunities and threats simply by analyzing your company’s strengths and weaknesses. Here are some potential questions to help you identify opportunities:
- How can we enhance our sales, customer onboarding, or customer support procedures?
- What type of messaging resonates most strongly with our target audience?
- How can we further engage our most active brand advocates?
- Are we allocating departmental resources in the most effective way?
- Are there any budgets, tools, or other resources that we haven’t fully utilized?
- Which advertising channels surpassed our expectations, and why?
Questions to Uncover Threats
When it comes to threats, you can certainly begin by asking a series of questions similar to those mentioned above. However, it’s often relatively straightforward to generate a list of potential threats to your business or project without posing any questions beforehand. These threats can be specific to your brand, such as the emergence of new or the presence of well-established competitors. They can also be broader threats, such as shifts in regulatory environments or market volatility. Threats can even be internal, such as high employee turnover rates that could jeopardize current growth.
Understanding PEST Analysis
While on the subject of internal versus external factors, it’s worth mentioning a related but distinct type of analysis closely tied to SWOT analyses: PEST analysis.
Now, this isn’t about calling in exterminators for a pest infestation. Instead, a PEST analysis functions much like a SWOT analysis, except it focuses on four external factors:
- Political
- Economic
- Sociocultural
- Technological
Advantages of PEST Analysis
One compelling reason to consider PEST analyses is that many factors within a PEST matrix could also be relevant to the Opportunities and Threats sections of your SWOT analysis. For example, the kind of political and economic turmoil witnessed in the United States over the past year could pose legitimate threats (and potentially opportunities) to numerous businesses. However, due to their broader scale and often intricate underlying causes, these obstacles tend to be more complex than the typical opportunities and threats addressed in a standard SWOT analysis.
Image via Dr. Jean-Paul Rodrigue/Hofstra University
Disadvantages of PEST Analysis
Furthermore, obstacles identified through a PEST analysis usually have longer timeframes—it’s much easier and quicker to address internal challenges like high staff turnover than to wait for an economic recovery (or another bubble to burst). That’s why many large corporations conduct both SWOT and PEST analyses concurrently. SWOT analyses offer more immediate, actionable insights, while PEST analyses prove valuable for developing long-term strategies and plans.
Benefits of SWOT Analysis for Small Businesses
If you’re a marketer or a small business owner, you might be wondering about the practicality and feasibility of SWOT analyses for smaller companies and organizations. While conducting a comprehensive SWOT analysis does require some resources, it offers numerous benefits, even for the smallest of businesses.
Gain a comprehensive overview. Conducting a SWOT analysis provides a unique chance to gain a deeper understanding of your business operations. It’s easy to get caught up in the daily grind, and a SWOT analysis allows you to step back and gain a broader, more holistic view of your business and its position within the industry.
Enhance specific campaigns and projects. Another advantage of SWOT analyses is their adaptability to various scenarios—they’re not just for high-level business overviews. You can utilize SWOT analyses to assess the potential strengths and weaknesses of upcoming advertising campaigns, planned content projects, or even decide whether your company should participate in trade shows or industry events.
Here’s an example of a SWOT analysis for a project:
- Develop actionable strategies. It goes without saying that SWOT analyses help identify your company’s strengths, areas for improvement, and the opportunities and threats it faces. However, they go beyond mere identification—SWOT analyses empower you to develop and implement concrete strategies and timelines for potential solutions. This proves beneficial for creating budgets, identifying hiring needs, and other mid- to long-term strategic planning.
A Practical SWOT Analysis Example
Now that we’ve discussed each element of a SWOT analysis and the types of probing questions to ask, let’s put our knowledge into practice and create a practical example.
To illustrate how it works, imagine a family-owned restaurant with a single location operating in an urban area. Let’s create a SWOT analysis based on this scenario.
Here’s the example SWOT analysis for our fictional restaurant:
The matrix format allows for quick and easy identification of the various elements included in your analysis.
Strengths Examples
- Prime location with high foot traffic
- Positive reputation within the local community
- Seasonal menu featuring locally sourced ingredients
Weaknesses Examples
- Higher prices compared to similar chain restaurants
- Limited reach due to a single location
- Modest advertising budget
- Lack of integration with food delivery apps/technology
Opportunities Examples
- Growing interest in and support for locally sourced ingredients
- Seasonal menus offer freshness and variety
- Potential for expansion through food delivery apps/technology
Threats Examples
- Intensifying competition from well-established chain restaurants
- Economic uncertainty
- Rising costs of ingredients
Acting on Your SWOT Analysis Results: A Roadmap
You’ve put in the work and now have a completed SWOT matrix. You’ve identified internal strengths and weaknesses, along with external opportunities and threats. You see your company with fresh eyes.
So, what’s next?
Ideally, there are two action stages following a SWOT analysis. Firstly, strive to align your strengths with your opportunities. Secondly, focus on transforming weaknesses into strengths. Let’s see how this works.
1. Leverage Your Strengths
The beauty of the strengths you’ve identified is that you’re already excelling in those areas.
In our restaurant example, the location, reputation, and seasonal menu are strengths. This indicates that the restaurant should continue experimenting with its popular seasonal offerings. It also suggests nurturing the strong relationships built with regular customers, which contribute to the establishment’s positive reputation within the community.
Essentially, acting on your business’s strengths boils down to “doing more of what you’re already good at.”
2. Address Your Weaknesses
Addressing the weaknesses identified in your SWOT analysis can be more challenging, mainly because it requires honesty about your shortcomings.
In our restaurant example, some weaknesses are difficult to tackle. Competing with the purchasing power of large chain restaurants can be daunting for smaller, family-run businesses. The restaurant also grapples with limited reach, a restricted advertising budget, and missed opportunities for increased sales by not offering online ordering and delivery through platforms like Foodler or Grubhub.
However, it’s not a lost cause. While competing with a chain on price might be challenging, small businesses can differentiate themselves by cultivating strong, meaningful relationships with customers—a strength our example restaurant already possesses and something chain restaurants struggle to replicate.
3. Capitalize on Opportunities
The Opportunities section of your SWOT analysis offers the most actionable insights, and that’s intentional. By identifying opportunities through the lens of your strengths, you create a roadmap for growth.
In our example, the rising consumer demand for ethically sourced, locally grown ingredients is a significant opportunity. However, our restaurateurs can’t afford to be complacent—there’s more to be done. This could involve investing in technical expertise to leverage opportunities presented by food delivery apps or intensifying efforts to source locally grown produce at more competitive prices.
It’s important to avoid overconfidence or complacency when it comes to opportunities. Even with a significant competitive edge, failing to dedicate enough time, funds, or personnel to maintain that advantage could lead to missed opportunities over time.
While each business has unique opportunities, crafting a clear roadmap for capitalizing on them is crucial, whether they are internal or external.
4. Mitigate Threats
Anticipating and minimizing the threats identified in your SWOT analysis is perhaps the most demanding challenge, primarily because threats are often external. Your control over external factors is limited.
Every threat, and its corresponding response, is different. However, regardless of the specific threats outlined in your SWOT analysis, addressing and monitoring them should be a top priority, irrespective of your level of control over them.
In our restaurant example, all three threats pose considerable challenges. To compete with chain restaurants on price, our restaurateurs might need to make difficult choices: compromise on their values by sourcing cheaper ingredients or reduce profit margins to remain competitive. Similarly, economic uncertainty is almost impossible to fully mitigate, making it a constant threat to the restaurant’s stability.
Some SWOT analyses might reveal overlaps between opportunities and threats. In our example, the increasing popularity of locally sourced ingredients represents an opportunity, while heightened competition is a threat. In this scenario, the restaurant could highlight its partnerships with local farmers—reinforcing its commitment to the community and regional economy—as a way to differentiate itself from the increasingly desperate chain restaurants vying for its customer base.
When compiling your SWOT analysis results, watch out for such overlaps and explore ways to simultaneously seize opportunities and mitigate threats.
Free SWOT Analysis Template
Ready to apply these concepts to your own business? Download our free free, editable, SWOT analysis template.
It’s a Google Sheet, so you can easily add or delete rows, edit and answer questions, integrate it into presentations, and much more.
View full-size image | Open Google Sheet
We’ve also included a blank template:
