There is much more to ensuring the success of your business than identifying ideas and opportunities. Business ideas and opportunities must be evaluated and tested against something else, and in this case: SWOT. A SWOT analysis is designed to test the viability, profitability and competitiveness of your proposed business. And the earlier the results of your SWOT satisfy you the better to starting off.
SWOT is an acronym for business Strengths, Weaknesses, Opportunities, and Threats. Every new and existing business has its strengths, weaknesses, opportunities and threats – and yours will not be an exception. Considering the fact that almost 80% of new businesses die in their infancy within the first 3 years of existence, a SWOT analysis will help ensure that anything that could go wrong has been foreseen and guarded against.
The strengths of your business are simply your strong business points or the identified pluses in your proposed business structure. These are the certain and most assured areas where you business will excel and succeed. This might be the obvious location of your business, the reputable expertise of your employees, the higher quality of your products, and the overwhelming demands for your products among others.
The weaknesses of your business have to do with those areas where your business will struggle and flounder before managing to stand. The weaknesses of a business may be its undoing and pull it down into sinking underwater, while it could also be managed to better advantage if the entrepreneurs would not just take things lying low. This could be shortage of finance to run the business, inadequate staff, unfavourable reviews and dying patronage among others.
The opportunities of your business are those areas that your business could expand upon. They are the open gates through which your business could walk, and they are the new vistas which your business could exploit. The opportunities of your business could be the international expansion and demand for your products, the rising popularity of your business, and the overwhelming investors ready to commit their money into your business. It could even be striking gold in available cheaper resources among others.
The threats to your business are those factors militating against the success of your business. They are the ever-present dangers to which your business could fall at any time. They are those unstable and immeasurable factors that keep you awake at night while keeping your employees unsure of the security of their jobs. Your business threats could include unstable government policies, overwhelming strengths of bigger rivals, changing customers’ preferences, and threats of war and civil disturbances.
To this extent, a proper SWOT analysis will help you to determine if the business is worth pursuing further, if you need to modify the business structure and objectives to allow for market changes, or if you just need to drop the business proposal entirely and pursue a new course.