When you have a big decision to make in your business, the last thing you want to do is wing it. A SWOT analysis is a simple but powerful tool to provide structure to your decision-making and help guide you in the right direction. 

What is a SWOT analysis?

What does SWOT stand for? Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is a matrix-like tool that outlines each. Most times, a SWOT analysis is formatted in a table, like this:

SWOT matrix template

The SWOT matrix is grouped into two sorts of factors: internal and external.

Internal factors: Strengths and Weaknesses

Your strengths and weaknesses are already there inside of your business. This is the place to be clear-eyed about what you have and what you lack. These can include: 

• Financial resources
• Physical resources
• Human resources
• Other assets
• Processes and programs

External factors: Opportunities and Threats

External factors are what help you drive a decision forward, by identifying opportunities to seize and threats to avoid. External factors include:

• Market trends
• Economic trends
• Funding
• Demographics
• Relationships and network
• Regulations

SWOT: Strengths

Opportunities are favorable internal factors you should take advantage of, including: 

• Differentiators
• What it excels at
• Unique resources/assets
• Good things others say about you
• Unique selling proposition
• Values that drive you

SWOT strength examples: customer-first culture, features your competitors don’t have, strong cash flow, innovations

SWOT: Weaknesses

Weaknesses are unfavorable internal factors  you should mitigate, including: 

• People, resources, systems, procedures that are lacking
• Things competitors have that you don’t
• What you could improve upon
• Complaints from customers/stakeholders

SWOT weakness examples: limited cash flow, small team, reliance on old/obsolete technologies

SWOT: Opportunities

Opportunities in a SWOT analysis are favorable external factors you could take advantage of, including: 

• Trends that favor you
• Changes in technology, social patterns, legislation
• Underserved markets that could be a fit for your business
• Emerging need
• Media coverage around your area of expertise

SWOT opportunity examples: your industry trending, stronger economy for investments, a new generation of consumers connecting to your offering

SWOT: Threats

Opportunities are unfavorable external factors you should mitigate, including: 

• Where the competition comes outshines you
• Where weaknesses leave you more exposed to shifting tides
• Shifts in market requirements
• Evolving technology
• Changing customer attitudes toward your offer

SWOT threat examples: more well-funded competitors, downturn in market, upcoming regulation that negatively impacts operations

Benefits of doing a SWOT analysis

There’s a few reasons people love using the SWOT structure for decision-making analysis.

First of all, it’s a flexible framework. You can apply a SWOT analysis to an initiative, a person, a team, a product, a strategy, or a company as a whole. You can even SWOT one of your competitors as part of a competitive analysis.

A SWOT analysis also encourages you to take a step back to look at the bigger picture and be objective in your approach. Often we can get stuck in a rut when it comes to our strategic thinking — i.e. “we’ve been doing it this way for years” or “if it’s not broken, don’t fix it.” Performing a SWOT analysis invites you to rethink the external and external factors that should be weighing on your decision.

Putting together a SWOT table also helps you notice connections and patterns between the different parts of your analysis subject. For example, you might not often think of your internal resources as they relate to social trends, and a SWOT analysis could expose interesting connections between the two.

SWOT analyses are forward-looking, while remaining grounded in where you are today. By drawing connections across internal and external factors, as well as positives and negatives, you’re able to make better predictions about the outcomes of your decisions.

When should you do a SWOT analysis?

You might do a version of SWOT analysis with smaller decisions, but that’s likely impromptu and minimal; you don’t need to call a meeting to do a SWOT analysis on whether to stock Cool Ranch or Nacho Cheese Doritos in your snack room. (Obviously, the answer is Cool Ranch.)

For the most part, you should save your SWOTs for the bigger things in your business, like

• Before you commit to strategic action
• When you’re evaluating your competitive position
• Guide strategic planning and goal-setting

How to do a SWOT analysis

If you’ve decided something is worth a SWOT analysis, it’s worth taking the time to do it right! Just like in your business operating system, investing time in organization up front will help you get much better results down the line.

Stay organized and accountable.

Designate people to lead and record the SWOT analysis. This may be two separate people, or one person if the group is small and it’s manageable. Choose the decision makers who can condense the big picture of the SWOT analysis into a strategy and action plan.

Determine your objective.

It may sound fun, but don’t SWOT just to SWOT! Decide ahead of time what your objective is. It’s easier if you’re using a SWOT analysis to answer yes or no to moving forward with something, like if you’re deciding whether or not to hire someone. 

Oftentimes, however, your objective will be more complicated. Imagine you’re using a SWOT analysis to decide on a marketing plan for the upcoming quarter. Decide on a clear objective and tangible outcomes, like: once we finish our SWOT analysis, we will decide which marketing channels to invest in, which products we will feature, and which customer segments we’re targeting. That doesn’t bring you to a full-blown marketing strategy, but it will get you the big picture and guidance on how to design the rest.

Gather data and people.

Before you SWOT, consider the information you need. Get what you can from good internal data and human resources. Identify subject matter experts who may have great insights, even if they won’t be a part of the endgame decision-making process. 

Start brainstorming.

Once you have your plan for your SWOT analysis, start brainstorming. It’s a good idea to start getting every idea out there at first, and worry about refining them later. 

Focus on the biggest change-makers.

After you’ve gotten a good list for each quadrant of your SWOT matrix, identify the things that are most important to your objective. For example, while Tik Tok has been a growing advertising channel for many businesses, it’s less proven for B2B marketing, so if you're developing a B2B marketing plan, you may omit it from your final analysis.

Develop strategy that plays to strengths and mitigates weaknesses.

Once you have your streamlined SWOT analysis, it’s time for your decision-makers to develop their strategy. While they may be unpleasant to consider, naming your weaknesses is a huge help in coming up with stronger strategies. Make sure you’re accounting for them in your final decision.

After SWOT analysis, what next?

Strategy time!

There’s a couple of different ways to work with the information you’ve gathered. 

Mitigate the negatives. Your internal weaknesses and external threats give you the most urgent courses of action. How can your strengths or opportunities mitigate them? Can you turn any weaknesses into opportunities? For example, if one threat is that there’s something you’re not doing that your competitors are, you also have an opportunity to start it.

Harness the positives. How can your strengths be applied to cover your weaknesses? Do more of what you’re good at. Seize opportunities. How do your strengths match up with your opportunities? 

In Strety, you can complete a SWOT analysis on the company, team, and even individual level for a personal SWOT analysis. The SWOT analysis sits alongside the other business vision tools we offer, so they intuitively help guide your strategy.

By making your company SWOT analysis available to your team in Strety, you give your employees and stakeholders something to think about whenever they come up with a new strategy or need to make a big decision. You should always seek to overcome weaknesses and strengthen your position, and a company SWOT analysis helps you stay on top of it.

You can get a SWOT analysis going right away with a free trial in Strety — and check out our other business operating system tools while you’re at it! For a product tour that will help you see how your business can be even more organized, book time with a Strety team member.