The importance of swot analysis lies on identifying opportunities and overcoming threats. The process helps clarify your thinking about the external factors that influence your success or failure.
While some organizations conduct this type of analysis once, then rely on it periodically for reference, others find that an ongoing assessment of current strengths and weaknesses keeps them focused on what’s most important to the organization.
Here are five good reasons to do a SWOT analysis today:
Reasons To Conduct a SWOT Analysis
No matter how often you perform a SWOT analysis, these are five reasons why it’s critical to the success of your business:
1. Helps You Achieve Your Goals
The first step in defining goals is getting clear on what they are not. A strong SWOT analysis can uncover hidden assumptions, reveal gaps between where you are now and where you want to be and identify the internal and external factors that could help or hinder your progress.
2. Strengthens Your Competitive Advantage
SWOT analysis can help you assess your competitive environment so you know which opportunities exist for business growth and what threats threaten your ability to compete. By better understanding how competitors work, you’ll be in a stronger position to develop strategies that take advantage of their weaknesses. You’ll also uncover new ways to benefit from their presence without getting too close for comfort.
3. Increases Customer Satisfaction
A strong SWOT analysis provides valuable customer intelligence.
Do customers value quality over price? Will they pay more for a product if it’s delivered faster? What are the consequences of offering a lower price?
Armed with this information, you can better tailor your products and services to meet customer needs.
4. Boosts Employee Morale
By including employees in the SWOT analysis process, you give them a voice in setting organizational priorities. Involving others also encourages buy-in for future planning which ultimately increases trust and productivity.
5. Stabilizes Your Organization
An effective SWOT analysis template will help you assess threats within your organization. The sooner problems are recognized, the less impact they have on the company’s growth potential.
Keeping an eye on current trends helps address issues before they snowball into something bigger that could derail your momentum.
How To Do a SWOT Analysis
There are many ways to do a SWOT analysis, but regardless of how you choose to structure the process, it should start with identifying strengths and weaknesses. To do this, consider both internal factors (management skills, employee attitudes) and external factors (competition, availability of resources).
Organizations often identify opportunities by looking for trends in their industry. By evaluating macroeconomic trends, you can get a sense of the emerging opportunities for your business.
One way to identify threats is to consider which factors could influence weaknesses that have already been identified. Whatever approach you use, a SWOT analysis should provide a clear path forward for achieving your goals and objectives.
Some organizations also conduct a “reverse SWOT analysis” by evaluating the external factors that are helping them succeed. This process can uncover opportunities for growth and new ways to capitalize on existing strengths.
When To Do a SWOT Analysis
A SWOT analysis can be used to help guide short- and long-term planning. While some companies conduct this type of analysis once and rely on it periodically for reference, others find that an ongoing assessment keeps them focused on what’s most important to the company.
Here are three times when you should consider performing a SWOT analysis of a company:
Prior to launching a new product or service
Recession often presents opportunities for savvy business owners, but it’s important to stay on track with your long-term objectives. A SWOT analysis helps you see how external factors have shifted, so you can take advantage of new opportunities without straying from your original plan.
Prior to making a significant organizational change
A SWOT analysis can help you identify how changes in an organization (such as a shift in management or new policies) will influence opportunities and threats. Whatever the changes may be, having a clear plan in place and including it in your report helps employees feel more confident about moving forward as a united team.
Prior to making a decision
Once you’ve completed your analysis, it can be helpful to step back and review the results. This allows you time to consider the implications of your findings and how they relate to your company’s vision. While this step may not be necessary for every decision, it can help ensure that you’re moving in the right direction.
By conducting a balanced SWOT analysis, you can ensure that your company is making smart decisions and bringing about positive change. A comprehensive review of your assets and liabilities will help you develop a growth strategy that capitalizes on existing strengths and responds to evolving opportunities and threats. It’s also important to keep in mind that both weaknesses and threats can be turned into strengths through strategic planning and vice versa.
For example, if there’s increased competition for your products or services, it may be time to revamp marketing strategies or invest in new technology. By evaluating the external factors that are influencing your business now, you’ll make smarter choices for achieving success down the road.
To get started with doing SWOT analysis for your company, check out Venngage. The platform has tons of templates. All you need to do is pick the perfect SWOT analysis example you can use as inspiration. Get started today!