As we have mentioned in some of our previous posts it is important to assess the niche where you think of doing business before starting up. A tool to use in this connection is a SWOT analysis. This post will let you know what you can gain from a SWOT analysis and also how you can create one.
SWOT analysis for a startup business – what can you gain?
A SWOT analysis provides an overview of your business in the niche where you operate. Once you have evaluated and recognized the output of your SWOT analysis, you can create a market positioning strategy. It is important to realize that a SWOT analysis is a snap shot of the market conditions. These can change over time, and it is therefore a good idea to make a new SWOT analysis once in a while to find out if the your circumstances has changed.
SWOT is an acronym for;Strength, Weaknesses, Opportunities and Threats. It is constructed so that it shows the company’s internal capabilities (Strength, Weaknesses) and ambient impact on the company (Opportunities, Threats).
When you have create a SWOT analysis it should help you to answer the following questions:
- Does my startup have some core services, which I can build a strategy around?
- Does my startup have weaknesses that make it vulnerable – and is there anything I can do to address this?
- What market opportunities can my startup take advantage of with the knowledge and the resources it has today (without resources the opportunities will just be an illusion)
- What external threats should the startup watch out for?
How to make a SWOT ANALYSIS
Strength and Weaknesses are related to your startups internal relations.
Strengthsare what your startup excels in. It is the areas where your startup could have an advantages over the competition in its niche. Examples of strengths could be:
- New technology.
- High quality of products.
- Extensive production capacity.
Weaknesses are ares were you do not excel or things the your startup do not have. Example of Weaknesses could be:
- Poor liquidity.
- High staff circulation.
- Poor location.
Opportunities and Threats are related to external circumstances. Depending on the startup, circumstances that are seen as threats for one can be seen as an opportunity for others.
Opportunities are circumstances that your startup should try to exploit, for example in order to increase your profits or market share. Examples of opportunities could be:
- New government regulations.
- Easy access to new markets.
- New trends on the market.
Threats are circumstances that you should try to minimize or avoid as they can damage the your business opportunities. Examples of threats could be:
- Slowdown in the economy.
- Increased foreign competition.
- New technologies.
When you have made your SWOT analysis it is important that you start making some strategic planning based up on its results. The business secret to all strategic planning is to summarize the company’s strengths in management, services/products, marketing, development etc. to core a service. The core service is what your customers should associate your startup.
Here is a nice video that talks about the elements in the SWOT analysis:
How to use the SWOT analysis for a startup business?
After having prepared a SWOT analysis it should be used for developing your future plans for the your startup.
- The plans should build on the strengths and try to eliminate the weaknesses of your startup.
- The plans must also ensure that the opportunities that is found in the niche can be exploited, and the threats that can be foreseen minimized.
Here is a short video on how use a SWOT analysis.
What are your experience with performing a SWOT analysis?
I would like to here what your experience in regards to doing a SWOT analysis:
- Did you make one before starting up your business?
- Do you think a SWOT analysis is a good tool to use?
- Have you any points in your SWOT analysis that you think is important to remember?
Please share your thoughts.