Many businesses, large and small, use SWOTs to evaluate their business decisions. A SWOT analysis, which refers to strengths, weaknesses, opportunities and threats, is one method of focusing the direction of your small business and exploring opportunities for growth. You might use a SWOT analysis to evaluate a specific problem or to periodically examine the health of your business, much like a doctor's checkup.
Brainstorm a list of your small business's strengths. Examples of strengths might include your workforce's experience or your business's specialties and what it does exceptionally well, such as offering the best cupcakes in town. List your assets and the areas of your business that are making the most money. For example, you might sell a lot of baseball caps, but not many golf clubs.
List your business's weaknesses. These might include a poor response rate to advertising or a lack of experience in your field. If your small business is also a family-run business, perhaps not all of your family members share the same vision for the company. Another example of a weakness is that you stock too many loaves of bread in your bakery and they become stale before you can sell them. In other words, identify the areas in which you are losing money.
Brainstorm a list of opportunities for your business. You might branch out into a different product or service for which there is a demand in your area. If customers are asking for a product or service you aren't currently selling, you might obtain a loan to expand your business. Consider the needs of your customers and how you might fulfill them.
Make a list of potential threats. Most of these will likely be external to your business. For example, a new law requiring stricter nutritional labeling might negatively affect your bakery's sales. Perhaps a new, similar business recently opened near yours. If you own a farm, perhaps the weather has not been favorable to your crops. Consider all of your business's vulnerabilities.
Evaluate the SWOT lists. Determine if there are any weaknesses that you could turn into strengths. Consider using a threat as an opportunity. For example, if your bakery must post nutritional information, revamp your recipes so that you can inform your customers that your baked goods contain fewer calories than typical supermarket items. You might also use your SWOT lists to evaluate the feasibility of a specific decision that affects your business. For instance, analyze the SWOT to determine if adding a cheese-making operation to your farm will help your business.
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