Small Business SWOT Analysis - Internal Analysis

Why Small Business SWOT Analysis?

A important step in evaluating your small business model.

One way to do this is to assess your model from the point of view of your strengths, weaknesses, opportunities or threats - doing a SWOT analysis.

SWOT Analysis is a technique used to size up a small businesses internal strengths and weaknesses, and its external opportunities and threats.

Strengths

An internal strength is something that the business is good at, or a characteristic that gives it an important capability.

It might be important expertise, a valuable or scarce resource, a skill or a capability that gives the business a competitive advantage.

The internal strengths represent competitive assets and might include:

• core competencies,
• adequate financial support,
• economies of scale,
• cost advantages,
• proven management,
• manufacturing capability,
• innovative product design,
• innovative delivery systems, etc.

Weaknesses

An internal weakness is any problem or deficiency or limitation that puts the business at a disadvantage, causes it to perform poorly. It may or may not make the business vulnerable, depending on how attractive the missing skill, capability or resource is in the market.

The internal weaknesses represent competitive liabilities, and might include:

• no clear direction,
• old or obsolete equipment,
• missing skills or core competencies,
• internal operating problems,
• shortage of working capital or under-financed operations,
• high costs, etc.

Opportunities

Opportunities are conditions (or emerging conditions) within the market that could enable the business to generate profitable business growth, give the business an advantage over their competitors, or enable the company to cover an external threat.

Opportunities might include:

• an opening in a new market segment,
• ways to improve or expand the product line,
• falling trade barriers,
• new technology, etc.

Threats

External threats are market conditions that, if unaddressed, are likely to make the business vulnerable to loss of market share or a reduction in profitability. Threats might include:

• entry of new competitors into the market,
• a stagnant or declining market,
• government intervention into the market,
• recession,
• changes to customer needs, etc

What's Next?

Now that I have told you what Small Business SWOT Analysis is, it is time to start working on one for your business concept.

• Analyzing your internal strengths,
• Analyzing your internal weaknesses,
• Identifying external opportunities for your business, and
• Identifying the external threats your business faces.

Once that is done, you can move on to put your analyzes together so that you can reassess or re-evaluate your business model to engineer a business model that is more likely to succeed.

• Putting it all together

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