A SWOT analysis examines all aspects of your company from both internal goals to external observations. This analysis is one of the most important components of your business plan and can improve your chances of receiving funding. Just as important, understanding components, such as target audience and competitive analysis, makes your business stronger. A SWOT analysis is typically represented as a four-quadrant matrix, and each component is in its quadrant. Let’s take a look at the four key pieces of this matrix.
Start by identifying the core strengths of your business. Examine your company from every angle to see how the processes impact profitability. Do you invest in industry-leading equipment? Do hiring policies encourage recruiting team members that match your corporate culture? Avoid identifying specific employees as your strength. Instead, examine the strategies that make them successful employees. Strive to strengthen these items continually.
Weaknesses are internal challenges that slow your success. Does your onboarding program need an update? Is your target audience well-defined? Does the physical layout of your facility limit productivity? Once you have a firm idea of what areas need improvement, begin making those changes. Lenders want to see that business owners recognize the challenges that their businesses face and have a plan to overcome them.
Your business depends on the industry, weather, and economy. Identify the external opportunities that help you maintain profitability. Does a local vendor provide raw materials on short notice? Is a competitor retiring and selling their business? Will a new multi-family housing development increase your pool of potential applicants? Stay aware of the local and global economy for ways to help build your business on these opportunities.
External threats are challenges you face from outside your organization. Are transportation costs increasing, limiting the amount of product your target audience can purchase? Will a legislative change impact the cost of materials? Has a new competitor entered your industry? Even though you may have no control over these challenges to your business model, you do control how you react to them. Remain aware of the changes that are going on in your environment. Keep your business model flexible enough so that you can respond appropriately.
With this information, you develop a plan that allows you to make strategic marketing decisions. These plans can help you identify more attainable goals and help you build a dynamic business that expands with the ever-changing economy.