Making Business Decisions with SWOT Analysis

Do you remember the last time you moved? Whatever your reason for moving, you made the decision to leave, and needed to find a new place to live. Chances are you viewed multiple prospective properties. You made careful considerations over things like the cost, the size of the backyard and the number of bedrooms. You made mental notes of the features you really liked and the things you didn’t like (and whether those were deal-breakers). If the good outweighed the bad, you signed the paperwork. If the bad outweighed the good, you might have smiled politely and told your real estate agent that you’d like to keep looking.

The example above describes a SWOT Analysis, and it serves as one of the most powerful tools in business.

Elements of a SWOT Analysis

Determining the best direction for your business is like buying a home. It’s helpful to break the situation down into four distinct quadrants, which are Strengths, Weaknesses, Opportunities and Threats.

• Strengths – List out the things your company does better than its competitors. Include strengths that are both internal and external.
• Weaknesses – Think about all the areas in which your company could improve. Why are you losing sales? What behaviors are hurting business? What are the weaknesses you can’t see from inside the organization?
• Opportunities – Look at your strengths and ask yourself if those open up any potential opportunities for your business. And conversely, look at your weaknesses. Can you create new opportunities for your company by eliminating any specific weakness?
• Threats – Figure out the challenges that stand in the way of your goals. What common mistakes have your competitors made? How’s your cash flow? What are the primary threats to your business?

A SWOT Analysis allows businesses to identify the forces that influence a strategy, action or initiative and is used as support when making business-critical decisions.

When and Why You Should Do a SWOT Analysis

Understanding the strengths, weaknesses and direction of your organization isn’t a nice-to-have, it’s a must in business. If you’re planning on implementing new policies, investing money into research and development, improving processes, or making any significant change in your business or personal life, it’s worth your time to conduct a SWOT Analysis.

When performing you SWOT Analysis, enlist the help of others within your organization or department. Involve relevant and active stakeholders to help provide an all-encompassing view rather than one person’s viewpoint in every section. With a group, you can find trends, patterns and connections between quadrants. You can shine light on your blind spots and discover paths of opportunity you never knew existed.

And, just like the last time you packed up and moved, you can reposition your business in a way that achieves your business analysis goals and improves your situation.