Starting your own business can be an exciting prospect, but it’s also something to be done with caution and care. A great way to get yourself thinking about this is to use SWOT analysis. This is a common analysis technique used by businesses and investors.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. To fully understand it, let’s look at each area separately.
Strengths
These are not only what you’re good at, but what you’re good at as compared to your competition. What exactly can you offer your customers that no one else does? What is going to bring business to you instead of everyone else? Knowing your strengths can help you capitalize on them because you can use these as the highlight of your advertising and in your presentations to investors.
Weaknesses
Finding your weaknesses may take a bit longer than finding your strengths, but it will be well worth your time. The best way to find your weaknesses is to look at it from your customers’ perspective. Are they waiting longer for a product? Are you difficult to communicate with? If you are having trouble, you can simply poll your customers to see what they say.
Most good business owners are well aware of the strengths and weaknesses of their organization. That’s because those things are right in front of them, staring them in the face. The benefit of the SWOT method is that it looks outside the business at the outside world. A business can have many strengths and few weaknesses, but if it’s operating as if it’s independent from everyone else, it’s still likely to fail. That is where analyzing opportunities and threats comes in.
Opportunities
Opportunities means looking at the ways your business can expand, grow, and increase profit that come from the outside instead of the inside. This could mean expanding into a new product or new market, or it could be as simple as outsourcing part of your work to increase available time or reduce costs.
A good business will find opportunities and do their best to expand into these areas. The important part is knowing which opportunities are the best ones so you don’t go in every direction and spread yourself too thin.
Threats
These are things in the outside world that threaten your business. They could be anything from competitors in your market, to new laws and regulations or new technology that could take a bite out of your business. While you can’t protect against every threat, you can be aware of them and make back-up plans to protect yourself and your business.
While it’s great to sit down and think about these factors, it’s more important that you learn how to use them. Once you know your strengths and weaknesses, you need to research and apply techniques to use your strengths to your advantage and fix your weaknesses. You also need to work on protecting against threats and venturing out into opportunities. On top of all this, remember to balance all four of these things and not just focus on one.
While SWOT is obviously not an all-encompassing analysis technique, it is a great way to get started and get yourself thinking realistically about your business prospects. Doing your research will also help you learn your area and even get you started on making business connections.
