What is SWOT Analysis?

What is 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

Looking for More Information?

If you would like more information about What SWOT Analysis is or how to complete one for your business idea, check out the posts on SWOT Analysis on the HSSB Blog. On the blog you will have an opportunity to read through more detailed information on 'what is SWOT Analysis', download templates to help you get started or ask any questions you have by leaving a comment!

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