If you want to succeed as a small business owner, you must be willing to honestly evaluate how things are going. You can’t ignore problems. You can’t just hope that things get better. You must take a long and hard look at your business and then make changes based on what you see.
A SWOT (strengths, weaknesses, opportunities, threats) analysis provides you with a framework for analyzing your business. It helps you identify what is and isn’t working, spot potential growth opportunities, and prepare for external threats.
Let’s look at each aspect.
Strengths
These are the things you have control over and are working well in your business. Focus on and try to develop these areas further. For example:
- Effective sales team
- Proprietary technology
- Proven marketing strategy
- Powerful systems/processes
- Strong customer base
Weaknesses
These are the things that aren’t working well in your business. Your goal is to change or eliminate these things so that they don’t continue to damage your business. For example:
- Ineffective marketing strategy
- High production costs
- Low profit margin
- Poor customer retention
- Ineffective internal processes
Opportunities
These are external factors that have the potential to benefit your business. The more you can capitalize on these opportunities, the more success you’ll have. For example:
- New technology
- Less competition
- Fewer taxes
- New markets
- Improved economic environment
Threats
These are external factors that could possibly hurt your business. Either avoid these things or adapt to them. For example:
- Increased competition
- Changing customer preferences
- Worsening economic conditions (recession)
- New regulations
- Significant technological changes
Performing a SWOT analysis is hard work. It’s essential to be honest about the current state of things and acknowledge areas where you’re struggling. This clear-headed analysis will help you overcome your weaknesses, capitalize on your strengths, and take advantage of unique opportunities.