SWOT analysis is carried out to identify external and internal factors that affect the company's success. This is a strategic planning tool with which you can describe any business's actual state of affairs. The analysis examines strengths, weaknesses, opportunities, and threats. In this article, we will take a closer look at each of the components, explain how to conduct a SWOT analysis, and tell you how to strengthen your business based on the data obtained. 

What is SWOT analysis? 

With the help of SWOT analysis, the performance of the business is evaluated, as well as competitors and other factors that may affect development. Based on the data received, the owners make important business decisions: rebrand, change the company's vector, introduce new products into the product line, or focus on certain products. 

During a SWOT analysis, it is important to take into account aspects that directly affect the activities and development of the company. For example, if your prices are lower than your competitors, it's worth talking about. But the fact that you regularly conduct team building has little effect on business development, so you do not need to indicate this in the analysis.

Components of a SWOT analysis

SWOT — Strengths, Weaknesses, Opportunities, and Threats. Let's find out in detail:

• Strengths. This includes the advantages that make the company competitive: product quality, marketing policy, location, etc. For example, for a cafe with healthy food, the location near the business center among fast food will be a strong point, because it will stand out from their background and attract nutrition fans. But if an ordinary cafe is located in a shopping center at the food court, the location will no longer be its strong point.
• Weaknesses. This includes factors that hinder profit growth. At the same time, it is necessary to understand where are the weaknesses and where are threats. Weaknesses are created by the company itself. For example, if the owner ignores promotion in social networks and does not allocate money for this, although the main income is expected from online sales. But if a well-known fast food opens opposite a small cafe, this is already a threat to business. It is much more difficult to deal with threats; for weaknesses, it is enough to change the strategy, improve the quality of service, or add new products to the trade line
• Opportunities. Here you need to add all aspects that are related to the work of competitors or market development. These are all things that you cannot influence, but which are easy to benefit from if you quickly orient yourself and start acting. For example, the healthy food trend is a great opportunity for natural food stores to grow if they start investing more in marketing. 
• Threats. This is everything that happens regardless of the desire or actions of the company. For example, a crisis, seasonal fluctuations, fashion changes, and new companies entering the market. But if you understand where the threat is coming from, you can redesign your business so that you don't lose your existing customer base. 

Remember that when analyzing each of the parties, you must be as honest as possible: indicate absolutely everything, even if it is difficult for you to admit some of the shortcomings. This is especially true for weaknesses. The more detailed you describe them, the easier it will be for the company to get rid of them.

Why you need to conduct a SWOT analysis

SWOT analysis should be carried out periodically in any company, regardless of the niche. Here are 3 main reasons to do it:

1. One of the biggest problems for businesses is the loss of connection with the target audience. Your new product may fail if the fashion for it has passed or competitors have launched a more advanced model even earlier. Therefore, regular SWOT analysis will provide an opportunity to update data on the market situation and adjust to the circumstances. 
2. With the help of SWOT analysis, you can sum up the results of work for a certain period. Firstly, it will help to make a report for partners and investors. Secondly, you will make sure that the company is moving in the right direction. 
3. Also, a SWOT analysis will help assess the risks before making any major changes to the business model. It will be the starting point for making key decisions.

How to conduct a SWOT analysis

A SWOT analysis takes a lot of time and emotions. Because in the course of the analysis such weaknesses are often found, which one would not want to know about. Sometimes because of this, managers or employees who are entrusted with the analysis can hide unpleasant information or wishful thinking. To avoid this and get real data, entrust the analysis to several specialists or departments. And at the last stage, check and combine everything.

How to assess internal factors

Ask yourself a question that is typical for all questionnaires: what are your three positive qualities and what are your three negative ones? Add here the unique factors of the company that distinguishes it from the rest. For example, "We deal directly with suppliers" would not work here if all your competitors do this. 

How to assess external factors

Analyze not only each competitor separately but also the market as a whole. Evaluate how the attitude of customers towards your product and company, in general, has changed, and how they interact with competitors.

General rules for conducting a SWOT analysis:

1. Take into account not only your own subjective assessment but also the opinions of customers, outside analysts, etc.
2. Do not confuse external factors with internal ones. Remember that internal ones depend on your actions, and you cannot influence external ones - you can only adapt to them.
3. First analyze the internal factors, only then the external ones.
4. Write down only the factors that affect the company's profit, customer satisfaction, and market position. 
5. Do not use general phrases and vague statements in the report: write only specific data, backing them up with numbers. 
6. Set a time frame for the report. For example, the situation for the last 2 years.
7. Don't add too many factors—only the most basic ones—or else you'll be hard-pressed to see the real problems and benefits behind everything. 

Conclusion

SWOT analysis allows you to see the overall picture of what is happening within the company itself and the situation on the market. Although this analysis alone will not be enough for strategic planning data.