How to do a SWOT analysis for small business owners

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This analysis is designed to help businesses identify what could help or harm their business, both externally and internally. It can help to position your business competitively, to plan future strategies, and anticipate problems and roadblocks before they make an impact.

A truly effective and accurate SWOT analysis will be data-driven, realistic, and based on fact rather than belief or assumption. Some businesses will conduct a SWOT analysis when they need to develop a strategy to help meet new objectives, while others will conduct them regularly simply to stay on top of risks and opportunities.

This isn’t just an exercise designed for large businesses and corporations. Small businesses can find opportunities in SWOT analysis, gaining valuable insights from identifying and analyzing strengths, weaknesses, opportunities, and threats, however new and young they are. The earlier a SWOT analysis is implemented; the quicker businesses can identify their biggest opportunities and challenges.

Understanding internal factors (strengths and weaknesses)

Internal factors are exactly what they sound like – the processes, people, and assets within the organization. These internal factors can be tangible or intangible. Your internal strengths could include what you’re currently doing well in your market, your unique selling points, your digital assets, what sets your business apart in the industry, the technology and tools utilized, and the people within your team and their expertise.

A strength in SWOT analysis could be that your digital marketing team is innovative and market-leading, or it could be that your business is agile enough to pick up opportunities quickly when they occur.

Internal weaknesses are the areas your business should work on – the things that slow it down, recurring problems, and financial roadblocks. Staff churn could be a major problem, which costs time and money for recruitment. Your business could also lack certain skills or necessary resources.

Identifying external factors (opportunities and threats)

External factors are the opposite – they’re the opportunities and threats that exist outside your business and have the potential to either impact it positively or negatively. Opportunities are obviously what your business will be consistently looking for, from new customers to digital assets and valuable human resources. An opportunity will ultimately create a competitive advantage for your business and could lead to a greater market share.

It's just as important for your business to be aware of external threats in SWOT analysis – the risks that could erode its competitive advantage. Competitors, changes in the market, supply chain issues, and limited resources can all pose a threat to your business.

Step-by-step guide to conducting a SWOT analysis

A SWOT analysis is set out as a 2x2 table with four quadrants, one for each category.

Before you get started, decide if you’re trying to meet a specific objective or if your SWOT analysis is general. If you’re developing a new product or entering a new market, a SWOT analysis will be particularly helpful, but it can also be a less specific, exploratory exercise.

How to conduct an internal analysis

Your own understanding of your organization could be surprisingly narrow. Make sure you brainstorm with people and stakeholders throughout the business and ask for insights from those who interact with customers, design the tech, do the accounts, hire new people, and more. Only then, can you accumulate an accurate list of strengths and weaknesses.

It's up to you how you gather these insights to collect SWOT examples. You could do a company-wide survey, ask for input from team leaders, or conduct interviews and observations yourself. This is also a great way to identify employee skills and talents, which are important strengths and assets.

Both internal and external analyses are hugely strengthened by real data. It’s likely that your business produces a large amount of financial and operational data, so narrowing it down to the most illustrative sources is important. You could delve into hiring costs, social media engagement, customer demographics and locations, market share, or trend reports.

How to conduct an external analysis

Opportunities and threats in SWOT analysis can often be found through market analysis and examination of industry trends. Market research will help you to understand changes and challenges. It can even help you uncover gaps in your market – and whether they are small or seismic. You can achieve this through focus groups, observations and ethnography, field experiments, and surveys.

Competitor analysis will help you focus on who your business’ key challengers are, what they’re doing well, and what their market share is. Their marketing strategies, pricing, sales strategies, and assets should also be included in this to complete a full analysis.

SWOT analysis in strategic decision-making

Conducting a SWOT analysis is only the first step. The next step is to utilize customer insights and turn your business’ list of strengths, weaknesses, opportunities, and threats into actionable strategies your business can use to meet its objectives and improve customer retention.

Once you’ve collected these findings, it’s important to edit them. Not everything you discover will be an immediate priority – only the most pressing threats and lucrative opportunities should be included in your final strategy.

You can turn your business’ SWOT analysis into a meaningful, measurable strategy by producing an actionable list of priorities and aligning these with an actionable timeline. This will help your business mitigate the risks and weaknesses, as well as measure progress and adjust the strategy. For example, one of the threats identified six months ago could turn out to be minor, or an emerging opportunity could become accessible sooner than planned.

A SWOT analysis can be the fuel your business needs to create a marketing strategy or adapt the way you promote on social media. The way you develop your strategy, the people you target, and the way you leverage consistent messaging will be informed by real market research and data.

Implement SWOT in your business operations

To summarize, a SWOT analysis can be used to take stock of your business’s internal strengths and weaknesses, as well as external threats and opportunities. It can help you and your team understand what your business is doing well, what you’re struggling with, where your business could go in the future, and what could threaten its prosperity.

Now that you know how to perform a SWOT analysis for your small business, what first steps do you plan to take? Read on for more marketing tips and how to create a marketing strategy.