Last updated February 15, 2024
Written by
Zack Dean Zack Dean, BComm
Zack Dean is a professional writer, editor, and communications specialist with six years of experience. He graduated from Canada’s MacEwan University with a Bachelor of Communication St...
Reviewed by
Jeseth De Vera Jeseth De Vera, BA, LLB
Jeseth De Vera is a Legal Writer for LawDepot and was called to the Alberta Bar in 2023. Jeseth was born and raised in the Philippines, where she earned her Communication Arts degree - ...
|
Fact checked by
Rebecca Koehn Rebecca Koehn, BSc, MFA
Rebecca Koehn has been working in content creation and editing for over ten years and search engine optimization for over five years. Koehn is the Content Marketing Manager for LawDepot...
What is a SWOT analysis?
A SWOT (i.e., strengths, weaknesses, opportunities, and threats) analysis is a strategic planning and project management tool companies use to evaluate their business. SWOT analyses encourage you to take an objective view that allows a company to analyse itself, recognize challenges, and create new strategies for the future.
You complete a SWOT by making four lists of the company’s strengths, weaknesses, opportunities, and threats. The “strengths” and “weaknesses” lists typically analyse the company’s internal factors. The “opportunities” and “threats” lists look at the external factors that can help or harm the business.
Why is a SWOT analysis helpful?
A SWOT analysis is helpful because you can use it to continue developing areas of your company that are successful and refine those that are lacking. By looking at external factors that affect your company, you can also minimise risks and take advantage of beneficial circumstances when they present themselves.
A SWOT analysis is typically one part of a bigger Business Plan.
The first step in performing a SWOT analysis is gathering a team with diverse perspectives on the company. The best way to have a well-rounded SWOT is to have as many unique voices in the discussion as possible so you leave no stone unturned. Everyone involved in the process should have the freedom to speak honestly about the company.
Next, you need to decide why you’re creating a SWOT and what goals you want to achieve with it. The purpose can be to evaluate the entire company on a macro-level or to focus on specific components. If you have many individual areas of the company you want to look at, you can make as many SWOTs as you need.
After you’ve narrowed your focus by having a goal, make a list of questions you need to answer in order to properly evaluate your business. This will help guide your research.
For example, if you own a painting company, you may want to know:
- How much profit did I earn in each quarter this year?
- Which type of customer do I most commonly attract?
- Which type of customer did my competition attract?
- How much money am I spending on employee training?
- How much does my competition pay their employees?
- How many painting companies are in my area?
The information you gather will help you create an informed SWOT.
How do I create a SWOT?
Customise your SWOT analysis by completing LawDepot's questionnaire. Using our template will guarantee you complete all the required steps:
Step 1: State the type of business
Start your SWOT analysis by indicating whether the document is for a new business or one that already exists.
Step 2: State the name of your company
Ensure your SWOT analysis includes the name of your company.
Step 3: Create a list the company’s strengths
Brainstorm a list of your company’s strengths. Consider internal factors that will make your company grow.
Some examples of strengths you might want to include in your list are:
- Unique product or service
- Good profit margin
- Loyal customer base
- Ideal location for the target market
- Experienced and effective team
Step 4: Brainstorm a list the company’s weaknesses
Create a list of all your company’s internal weaknesses for your SWOT analysis.
Ask yourself which areas of the company need improvement or what advantages do your competitors have that you do not? Maybe your business is in a poor location or its reputation is damaged. Perhaps your employees lack the proper skills or expertise.
Include anything that may cause your business to face adversity.
Step 5: Make a list the company’s opportunities
Make a list of your company’s opportunities. Think about external factors that can help your business succeed.
Some questions you can ask yourself when making your list include:
- Do my competitors have any weaknesses that I can benefit from?
- Are there opportunities for partnerships or affiliates?
- Are there emerging trends that my company can capitalise on?
- Is there sufficient demand to expand my market share?
- Are there changes in technology that my company can take advantage of?
- Are there any government policies that could positively affect the business?
Step 6: List the company’s threats
Finish your SWOT analysis by listing any external threats to your business that may harm it or cause it to fail.
Some examples of threats include:
- Inflation or financial issues
- Tight labour market
- Rising costs of materials
- Increasing number of competitors
- Data breaches and other cyber risks
SWOT Analysis Example
Hillfort House Goods is a family-owned company that offers a wide selection of high-quality home goods, such as small furniture, kitchen and dining items, linen and sheets, storage solutions, and decors. Hillfort House Goods has been proudly serving the city of Bristol and surrounding areas since 2010.
Here is what its SWOT analysis looks like:
