SWOT is an acronym for strengths, weaknesses, opportunities, and threats. It is a method used to evaluate your company’s internal strengths and weaknesses, as well as identify any external opportunities or threats that may impact business operations.
“A SWOT analysis is a very important component of a company’s overall business plan,” says Kenneth Fox, former program coordinator with the University of New Orleans Small Business Development Center, who retired this past August. Although a potential client wouldn’t generally call the center and request assistance in completing a SWOT analysis, one is routinely conducted as part of a client’s overall business plan development.
Dr. William R. Osgood is co-founder and president of the Knowledge Institute, a consulting firm that supports business and community development in non- and for-profit organizations. He is recognized by the Small Business Administration as an expert in small business development, and echoes Fox’s sentiment. “SWOT in and of itself will not give specific answers. Instead, it is a way to organize information and assign probabilities to potential events–both good and bad–as the basis for developing business strategy and operational plans. Dr. Osgood’s 12-part workbook series, Common Sense, Strategic Management Learning Series (available at www.buzgate.org), has been adopted by the U.S. Small Business Administration as part of its first learning management series. In workbook 11 of the series, he offers step-by-step instructions on conducting a SWOT analysis.
Start your SWOT analysis by first listing your company’s strengths. Specifically, any resource or capability your company has that will allow you to achieve your stated goals, or that gives you an edge over your competition, is a strength.
Any limitation, fault, or defect that would hinder your business from achieving its goals and objectives would be considered a weakness. Dr. Osgood points out that technology can be considered both a strength and a weakness. For instance, if you or your employees are unable or unwilling to embrace new technology the business may suffer. In this case technology would be considered a weakness for your particular business.
Once you have performed a SWOT analysis yourself, Dr. Osgood recommends that you ask your key employees to go through the same process independently of each other and then gather all the ideas and construct a master list of all issues. This is a critical step in the SWOT process. “This may well bring some new matters to your attention that you haven’t been aware of or have chosen to ignore,” says Dr. Osgood.
Conducting a SWOT analysis is a fairly straightforward process. Once you have completed one, the results will help management identify ways to capitalize on your company’s strengths, correct any weaknesses, and ultimately assist in mapping out a plan for the future success of your business.