What is SWOT Analysis and why it is used? These questions might worry you if you want to analyse the position of your business in the market or in a specific industry. SWOT analysis is conducted with the market analysis while setting up a new business or launching a new product or strategy.
However, SWOT analysis is more crucial to the growth of your business and to making the right decisions at the right time. To avoid any loss later that could possibly end your business or halt the growth of your business, you need to explore the threats and opportunities your business might have.
In this blog, we will provide you with insights on the SWOT analysis and why it is important. Moreover, we will discuss each part of this analysis in detail to help you grow your business. So, let’s start this informative and valuable discussion!
Let’s discover accountants and compare their fees and expertise to hire an accountant compatible with your business needs and budget.
What is SWOT Analysis?
SWOT analysis is the evaluation of a business or its department to explore the different options for designing a strong and valid strategy contributing ultimately to the growth of an organisation. The growth projections, product launch, marketing strategy, industry analysis and competitor analysis all require a 360-degree analysis of a business.
And, SWOT analysis provides you with a complete picture of a business. SWOT consists of the following crucial analysis points:
S Strength
W Weaknesses
O Opportunities
T Threats
In other words, we analyse and find out the strengths, weaknesses, opportunities and threats in a business while conducting a SWOT analysis. Therefore, it provides us with a complete projection of a business and where it is likely to halt the progress of a business.
Why is SWOT Analysis Important?
While setting up a new business or initiating a new marketing or product plan, a business needs to conduct a SWOT analysis to get insights into its business. It highlights not only the strengths or strong points of a business on which basis a business can develop a strategy, it also makes the weaknesses and threats to a business more visible.
So, a business can take crucial steps before making a move in their business to avoid suffering any losses ultimately. SWOT becomes essential to make a business thrive by developing a strategy based on data and key facts rather than guesswork.
How to Conduct a SWOT Analysis?
A SWOT analysis is conducted using a four-quadrant matrix and each quadrant is evaluated differently to highlight both positive and negative points. Let’s discuss each of these points one by one!
Strengths
In this section, you have to find out the main qualities that distinguish your business or help your business grow. These strengths will give you a green signal about developing an aggressive strategy for the growth of your business. If your business lags behind in strengths, you need to work on increasing the strength of your organisation. For example:
- Business Performance
- Unique Skills
- Special Knowledge
- Experience
- Competitor Advantage
- Business profitability
Strengths analysis provides you with a deep understanding of how your business has a competitive edge in a specific industry or market and you can take advantage of these points to make your growth sustainable.
Weakness
You will highlight the main weaknesses of your business in this quadrant of the SWOT matrix. For example:
- Areas to Improve
- Resources Your Business Needs
- Unprofitable Business Parts
- Lacking Experience or Knowledge
- Costs or Money Needed
All of the above points can make your business less profitable and stop the progress and growth of it ultimately. It provides details of the points where your business needs the most attention and focuses to work. If you neglect these parts, your business is more likely to fail.
Opportunities
After analysing the strengths and weaknesses, the SWOT analysis chart discusses the opportunities your business could avail yourself in a certain direction. It could provide you with options you can use as an opportunity to grow your business and make a new venture by launching a new product in the market. For example, you can focus on the following points to explore the opportunities for the growth of your organisation.
- Business Goals and Roadmap to Achieve them
- Existing Customers/Clients
- Use of Technology
- Reaching the Potential Audience
- Related Businesses or Products
Opportunities provide insights into the unexplored options for the growth of your business. You can develop a strategy to exploit all the options before you make a final decision regarding shutting down or carrying forward a policy.
Threats
A business might have certain threats and risks from competitors, technological evolution or market disruptions. So, you need to underline these threats in this last quadrant of the SWOT matrix. Each business will face challenges and threats differently. However, we will provide you with general threats here you need to analyse.
- Complications and Challenges
- The strong points of the Competitor
- Competitor Edge You don’t have
- Economic Conditions
- Industrial Ups and downs
The risks and challenges surrounding a business, industry or market and their knowledge can save your business from major losses. So, this is the most crucial part of the SWOT analysis.
The Bottom Line
The conclusion is to go for a comprehensive SWOT analysis for making any plan for the growth of your business. This SWOT analysis helps a business points out the strengths, weaknesses, opportunities and threats in business.
Strengths and weaknesses part of the SWOT matrix focus on the present business conditions. On the other hand, the opportunities and threats let a business buckle up for enjoying the possible opportunities or plan for a likely challenge.
Lastly, you have got a comprehensive analysis of What is SWOT analysis and you can manage your business easily with this approach if rightly conducted.
Looking for expert accountants for an accurate SWOT analysis for your small business in the United Kingdom. AccountingFirms can help you in under two minutes!
Disclaimer: All the information provided in this article on What is SWOT Analysis, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.