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Overview

The decision of either to start a business or not start from the stage where you actualize that you have a business idea or not. The most recommended initial step to take in establishing this decision is evaluating the strengths and weaknesses in addition to the opportunities and threats involved in your business idea. A good framework to adopt is the SWOT analysis as it assists in weighing elements objectively in addition to making informed decisions in relation to whether the conceived idea is worth pursuing in the real world. Here's what you need to know about SWOT analysis—including how to use it to analyze your own business idea. Before even venturing on how SWOT analysis can be used to analyze a business, it good to familiarize with what it is first.

SWOT analysis

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A SWOT analysis is one of the most frequently used marketing strategy tools and was initially developed for industry and business opting to have full awareness of their businesses in terms of strategic planning and decision making. This tool is used to analyze key elements that pertain to your company’s strengths, weaknesses, opportunities, and threats(Schooley, 2022). Essentially, it will subject you to identify your business’s strengths, weaknesses, opportunities, and threats so that you can leverage these assets and minimize your vulnerabilities in the marketplace to create competitive advantage and increase your chances of success with customers. The idea behind a SWOT analysis is that it helps you understand your business from all angles so that you can anticipate problems and make key adjustments when necessary.

When do you use a swot analysis

A swot analysis has loads to offer in terms of perspective to a business performance. Some of the key perspectives include:

• Providing possibilities for new and future efforts that can be used as solutions to existing problems.

• Providing effective and efficient decisions on the best path for your initiative such as to identify threats, opportunities for success, and clarity on directions and choices.

• Determining areas where change can occur especially in the areas where economic trends affect operations.

• Adjusting and refining plans mid-course.

Qualities of a SWOT analysis (internal and external factors)

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Remember that a SWOT analysis focuses on the strengths weaknesses opportunities and threats. This is in order to reveal positive forces or elements that can work together in addition to potential problems.

Strengths and weaknesses (internal factors)

Strengths best describe the positive attributes that are in your organization which can be either tangible and intangible. These are internal and are considered as positive factors. It is important to note that these positive attributes are usually within your control. A good example of these positive attributes or strengths include the people's knowledge, credentials, background, network, skills, education, or reputation. Tangible assets that the company may have include capital, patents, technology, credit, existing customers, or distribution channels.

Some of the questions that you can ask yourself to identify the strengths or your company include; what do you do well, what advantages are within the company over its competitors, and what positive aspects that are internal to the business offer value or add value in relation to competitive advantage.

Weaknesses, on the other hand, are aspects that detract from the value being offered from a competitive disadvantage angle. These are the areas to note as through enhancing these areas you can be able to compete with the other competitors in the market. A good example of a company's weaknesses include a weak brand, lack of capital, high levels of debt, inadequate supply chain, or higher-than-average turnover.

Some of the questions that you need to ask yourself include; what factors are within your reach that are detracting your chance to maintain or obtain a competitive advantage over the rest, what would be the areas to improve, what does the business lack, does the business have limited resources, or is the business in an ideal location.

Opportunities and Threats (External factors)

Opportunities are the external environment or favorable factors that could give a company a competitive advantage over the rest. A good choice of example to use to describe external factors is an example of a country that chooses to cut tariffs, a car manufacturer can take advantage of this and start exporting its cars into a new market, which in return increases the sales leading to a bigger market share(Berry, 2022).

Some of the questions to ask include; is the perception of my business positive, is the opportunity ongoing, or what opportunities exist in the environment or market to benefit from.

Threats, on the other hand, refer to the negative elements of external factors that have the potential to cause harm to the business or organization. A good example is when a severe drought threatens to destroy or reduce a huge amount of crop yield to a wheat-producing company. Additional examples of threats to a company include rise of materials, lack of labor, increased competition, and so on.

Some of the questions to ask include; who and what is the current competition, what factors could put my business at risk, what situations or areas threatening marketing efforts, or what shifts in consumer trends or customer behaviors could reduce sales.

Use SWOT analysis qualities to help a business

Below are some tips on how to use SWOT analysis qualities to improve a business

Strengthen weaknesses

Strengths and weaknesses should be considered as part of the human condition and cannot be overlooked. However, it is good to be intentional in regards to how one approached the weaknesses. With a good business plan, you can shed some light on the weaknesses and work to improve them for the future endeavor.

Start by understanding the weaknesses. This can be achieved by establishing a forum to which employees can provide honest feedback in the business and also to you as an individual.

 Treat them like a to-do list. Prepare a quick note of the items or elements that need to be worked on which then will be followed by trying your best to improve them. This is return leads to making the weaknesses into strengths.

Partnering with complementary people who have specific skills and talents can lead to being able to have the sufficient and equipped staff to handle the weaknesses.

Develop a plan and create opportunities to learn. Take the weaknesses in your business as an opportunity for growth. By having a feasible plan and surrounding yourself with people is a good starting point. This strategy can lead to a company having a better market position.

Use opportunities to your advantage

As defined in the beginning, the swot framework describes opportunities as factors that if taken advantage of can provide an edge to a business from the rest in the market. Some of the ways to take advantage of your opportunities include:

Recognizing opportunities for funding is a huge step a company should take. Whenever you are meeting someone whose intention is to invest into your idea take advantage of that opportunity to grow. Additionally, look everywhere for potential funding(Opportunities.Biz, 2022).

Reframing the understanding of opportunities is another way to take advantage of opportunities. Take opportunities as a chance to grow and a challenge to expand your business. This is through incorporating a suitable business decision as part of the goals of the business.

Start treating clients and customers in the right manner as customers are the biggest opportunities a company can have to its business. This can be through expanding the delivery capacity and taking note of the feedbacks provided by them.

Getting good with marketing is another terrific opportunity and also an area where many businesses fall short. Through having a clear strategic planning process, you can have a different perspective in relation to expansion of your business.

Protect from threats

Having a clear plan that addresses the risks and threats that your company faces should be considered as critical factor in a business current processes. One should develop strategies that cushion and position the company in the market. Some of the strategies that can be deployed include:

• Selecting the proper business insurance

• Using a reliable business structure that limits liability

• Testing and analyzing to ensure high-quality products

• Having continuous innovation and growth management

• Organization of a risk management team(Kapoor et al., 2022)

References

Berry, T. (2022). How to Do a SWOT Analysis for Better Strategic Planning. Article bplans. https://articles.bplans.com/how-to-perform-swot-analysis/

Kapoor, A., Gupta, A., Gupta, R., Tanwar, S., Sharma, G., & Davidson, I. E. (2022). Ransomware Detection, Avoidance, and Mitigation Scheme: A Review and Future Directions. Sustainability, 14(1), 8. https://torrens.idm.oclc.org/login?url=https://www.proquest.com/scholarly-journals/ransomware-detection-avoidance-mitigation-scheme/docview/2618252322/se-2

Opportunities.Biz, B. (2022). How to Take Advantage of Business Opportunities. https://www.business-opportunities.biz/. https://www.business-opportunities.biz/2021/08/10/how-to-take-advantage-business-opportunities/

Schooley, S. (2022). SWOT Analysis: What It Is and When to Use It. Business News Daily. https://www.businessnewsdaily.com/4245-swot-analysis.html

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