Thinking of starting a new business? Our advice: grab a posterboard or setup your RocketBook Beacons on your whiteboard. (Really, any sheet of paper that can be divided into four quadrants will do.) A SWOT analysis is your next project – and probably, your best friend when it comes to the success of your business.
If you’re unfamiliar, SWOT stands for “Strengths, Weaknesses, Opportunities, Threats.” Typically, these are listed in four quadrants for easy reference (thus the posterboard). Don’t worry, we’ll walk you through the analysis step by step. If you’re learning about SWOT for the first time as an existing business owner, it’s not too late! This exercise will help you identify the murky areas or “stuck” places in your business, which will give you the clarity you need to go to the next level.
So, why a SWOT analysis? The objective here is to identify your spot in the market. This will be a foundational tool for the launch and growth of your business! As you work through the four quadrants, you’ll find areas to highlight, areas to improve, and areas to clarify in your business, which will help you find your ideal customer, stand out against competitors, and find smart strategies to take your business to the next level.
Before you start filling in the quadrants of your SWOT analysis, you’ve got to do your homework. Take a look at the market for your industry. Who are your competitors? Trust us, you have competition. You may not see it yet, but it’s there. To find competing brands, we suggest a Google search. What would your ideal client type into the search bar to find YOU? Whoever pops up is your competition. What do you like about them, and what discourages you from using their service or product? Take note of what competing brands do well and where they’re lacking. If you’re creating something new, there’s likely a gap in the market. Find it.
Once you’ve finished your research, draw your 4 quadrants. Leave plenty of room for notes – this is going to get good.
Head to the top left quadrant and start listing your strengths. Don’t limit yourself – these can be strengths of your business’s product or service as well as your own strengths as an entrepreneur. What do you do well? Why is your product great? What are you known for? Why are you passionate about this particular business?
Example: “I am a people person, so I offer excellent customer service.”
Move to the right, and write down some weaknesses. This might not seem as fun, but it’s just as important. What areas of business are you simply not good at? Which things are just “not your strong suit?” What would potential clients hope to get from you and your business that they will not find? No entrepreneur is great at everything, and no business meets every need. By clearly identifying what you don’t do, you’ll solidify what you do well – which will help you stay on the right track.
Example: “I’m not very organized, so I have a hard time keeping detailed financial records.”
As you move to the bottom left quadrant, shift your thinking a little bit. This section is more about your industry and less about you. Is there something missing in your current market? If you’re able to offer what’s missing, it’s definitely worth exploring. It will give you a competitive edge and offer something invaluable to your clients. What opportunities do you see that other companies aren’t taking advantage of? Make a note of those “open doors” so you can make plans to walk through them.
Example: “None of the other landscapers in my city offer full-color renderings for client approval, and I can quickly design those kinds of graphics.”
Finally, fill your bottom right quadrants with any hesitations or foreseen problems as you launch your business. Is the market saturated with competition? Are there areas of your business you haven’t found clarity on just yet? It’s also a good idea to list any issues that are out of your control, but could have significant effects on your business, like a potential COVID shutdown that will negatively impact your work, or a legal precedent or city code that will make it difficult for you to thrive.
Example: “My new restaurant could be limited to 50% capacity for the foreseeable future, which would greatly diminish my profits.”
You’ve done the research and you’ve combed through all the good, bad, and ugly of your business idea. Now, you’re equipped to strategize and summarize your business plan. Did any gaps pop up in your analysis? You can take the needed time to learn more about an area you’re unfamiliar with. Did you realize you’ll never crunch the numbers correctly? Factor in the cost of an accountant. Did you find a unique edge for your product? Build your marketing around it.
Consult your SWOT analysis often. Down the road, you may even find yourself wanting to revisit the entire process and create a new one. This is definitely one of our favorite tools for new (or growing!) businesses. Find your angle, fill in your gaps, and get ready to launch.
See more of our helpful guides and worksheets HERE.