How to do a SWOT? Definition and Examples

You've probably heard more than once about SWOT analysis. This tool is very popular in the business world because it helps us understand what our starting point is when launching a new business. It's a fundamental part of any business plan. 

That is why, if you are planning to launch a new business to the market, everything we have to share with you about the SWOT analysis will be very interesting for you. Don't miss this article!

What is the SWOT Analysis?

Let's start by defining what a SWOT analysis is. As its acronym indicates, this analysis allows us to understand the strengths, weaknesses, opportunities and threats of any project or business. 

It's a tool designed to understand the real situation of an organization or company in the market and to be able to make future decisions based on this analysis. So far, so good but... Let's see what the acronym means in detail in order to understand a little more about this analysis: 

1. What are the strengths in a business?

Strengths are all those features that make a business or company stand out in the market over the competition. That is to say, they are the things that they're doing well and that they do not need to modify, but rather, on the contrary, to strengthen. For example, a strength of a shoe company may be that it has a national market dominance or that it offers custom-made shoes and therefore stands out for its exclusivity. 

2. What are the opportunities of a business?

When we talk about opportunities, we refer to those paths that the company can take and has not yet explored. For example, in the case of shoe sales, an opportunity could be to start exporting shoes abroad. 

3. What are the weaknesses in a business? 

Weaknesses are those things that the company needs to change because they pose a potential problem. In our example, a weakness could be the lack of investors to expand the business abroad.

4. What are the threats?

And threats are those situations that can generate an imbalance in our business. These are not always issues that we can handle. For example, a threat can be a sudden increase in the price of the raw material we work with, in our case leather. 

Do you understand how we can diagram a SWOT analysis in our business? If you've been paying attention, you will surely have noticed that by structuring the information this way, we're gettin a very clear picture of the situation we are analyzing. This is key to be able to make increasingly accurate decisions . 

What are the benefits of SWOT analysis?

As we said at the beginning of this article, SWOT analysis is a key part of any business plan. Let's look at three of its most important benefits: 

It's the foundation of any strategic plan

You can't make a strategic plan if you have no idea what your starting point is. A SWOT analysis should be the foundation of any strategic plan. By understanding our current situation, we will be able to set challenging but achievable objectives and strategies. 

It allows us to see the big picture

Doing a SWOT analysis not only allows us to understand the internal situation of our business, but also to see the big picture of the market and understand where our business stands in it. 

It helps us make better decisions

Based on this analysis, it is possible to become aware of the problems and opportunities of our business or project. In view of this, we can make better decisions when defining the course we’re going to follow. 

An example of a SWOT analysis

If you have any doubts about how to do your own SWOT analysis, let's take a closer look at the example of the shoe company mentioned above. Let's assume that our company is called PALTA SHOES and has been on the market for about three years. The SWOT analysis would look something like this: 

Now it's your turn! Let's look at some key questions so you can create your own SWOT analysis. 

Key questions to create your own SWOT analysis 

Whether you want to do a SWOT analysis to make an important decision in your company, to launch a new business or simply for a personal project, there are certain key questions you can ask yourself when thinking about the strengths, opportunities, weaknesses and threats in question:

• Strengths: When writing down the strengths of your project or business, you can think about what the company does well. What makes it different from the competition? What are the internal resources or elements it has? What are the tangible assets it has? 

• Opportunities: Here it's important to review which markets are underserved and can be covered by what you offer. In which industry or market are there few competitors? In which industry or market is there an immediate need for certain products or services?

• Weaknesses: What are those resources that the company does not have and will not have in the future? What are those aspects in which the competition stands out?

• Threats: among the threats we can find new competitors in our field, fiscal, environmental or legal changes in our country or even a change in the attitude of customers towards what we sell or towards our brand in particular.  

We have come to the end... Do you think that with these questions and examples you are ready to start your own SWOT analysis? We hope so! Good luck!