What are your favorite letters from the alphabet? Mine are S, W, O, T. SWOT is an acronym and it's well-known in some circles and completely unheard-of in other circles. This is what it means:
SWOT is an analysis tool that stands for Strengths, Weaknesses, Opportunities, Threats. You can use this technique to help you in your business. Here's how.
A SWOT analysis will help you identify the four areas its name suggests: Strengths, Weaknesses, Opportunities, and Threats. The beauty of this technique is that it can be done on the back of an envelope on the midtown bus during rush-hour. It's not complicated but the results can be very fruitful.
If you are a lone wolf entrepreneur starting up a business from your spare bedroom, you might find it easier and quicker to do a SWOT analysis on a single piece of paper folded into four smaller squares. If you are the owner of a growing business, you may want to call your employee(s) into a meeting room and tape up 4 pieces of poster paper taped to the wall. The more people you have and the bigger your business is, the more paper you'll need.
Begin with strengths and ask yourself, "What are the strengths we have?" List them in point form in the strengths section of your worksheet. Then ask "what are our weaknesses?" and list those in the weaknesses area. Then ask, "what opportunities do we have available to us?" And finally, "what threats do we face as a company?"
Here's something to be aware of as you're doing this exercise: it's very easy to simply copy and paste your list from strengths into opportunities and from weaknesses into threats. At first glance, the lists are the same. But they are not the same. They are similar, but they are not the same. Often, your weaknesses can be used against you (thus becoming threats) but there is a difference between "understaffed" (which is a weakness) and "better-staffed competition" or "customers do not receive the attention they deserve" (which are both threats). Also, you could have very few weaknesses but a rising star competitor or a disgruntled employee who left with company secrets - both threats that may not be related to specific weaknesses.
Once you've done this exercise, now what do you do?
An analysis tool is only good if it provides something that can be acted upon. If you put the papers in the bottom of your desk drawer and go on to something else, SWOT has failed and you have wasted your time.
However, if you create a solid action plan with the information from it, you'll watch your business grow to new heights while it strengthens itself by protecting the weak areas. Here are some ways to use SWOT to succeed: