What Is a SWOT Analysis and How Do You Perform One?

A SWOT analysis is a strategic planning tool used to evaluate the internal and external factors that affect your business. You can utilize this tool to enhance your business strategy and remain competitive in the market.

[Read more: How to Start a Business]

What is a SWOT analysis?

SWOT stands for strengths, weaknesses, opportunities, and threats. This tool is a technique for analyzing each area of your business. You can conduct a SWOT analysis for your entire company or use it to examine a specific aspect of your business.

When implemented correctly, a SWOT analysis can help you identify ways to stand out from your competitors and increase your market share. It does this by helping you leverage your company’s strengths while reducing your chance of failure.

Strengths and weaknesses refer to the internal factors related to your company, such as your products, brand, and business location. With some effort, you can change these things over time.

In comparison, opportunities and threats are things that are happening in the market—like your competitors, pricing, and a market downturn. You can’t change any of these factors, but you can decide how your business will respond to them.

[Read more: A Data-Driven Marketing Guide for SMBs]

How to do a SWOT analysis

A SWOT analysis is a well-organized list of your company’s strengths, weaknesses, opportunities, and threats. Conducting your SWOT analysis is similar to completing a brainstorming activity. It’s best to do this with a group of employees who have varying perspectives about the business.

To get started, have everyone begin generating ideas about each of the four categories for five to 10 minutes. From there, you can share your ideas and start prioritizing them. Let’s look more closely at each of the four categories you’ll be evaluating.

Strengths

Strengths are the things that set your company apart and differentiate it from your competitors. Your strengths could include things like your employees, processes, or products. These strengths are integral to your company and drive your business. Here are some questions to ask when identifying your business’s strengths:

• What does your business do well?
• What unique resources do you have at your disposal?
• What would your competitors see as your strengths?
• What are the intangible assets your company has? (Your network, skills, brand, etc.)
• What are the tangible assets your company has? (Products, equipment, customers, etc.)

Weaknesses

Like strengths, weaknesses are an inherent part of your organization. But instead of giving your business a unique advantage, they hold it back in various ways. It’s not pleasant to examine your company’s weaknesses, but it's necessary. Here are some questions you can consider when identifying weaknesses:

• In what areas could your business stand to improve?
• What would your competitors likely see as your company’s biggest weaknesses?
• What resources do you need to be more competitive in the market?
• Are there any gaps in your current team or business strategy?

Opportunities

Opportunities are situations outside of your organization that you can use to create a positive outcome. However, you must know how to identify opportunities to take advantage of them.

The ability to see and capitalize on opportunities is what can set your business apart in the long run. Here are some questions to help you identify possible opportunities:

• Are there any big or small market opportunities you could be taking advantage of?
• How can you leverage your business’s strengths as opportunities?
• Are there any regulation changes that could positively impact your business?

Threats

Threats are any external factors that could negatively impact your business, such as tariffs or a policy change. Threats are always outside of your control, but you do have a choice in how you respond to them. When handled appropriately, a threat could even turn into an opportunity. Here are a few questions to help you identify potential threats:

• Do your company’s weaknesses expose it to any threats?
• Are there any actions your competitors are taking that pose a threat to your business?
• Could future policy changes affect the way you do business?
• Could changes in consumer behavior pose an eventual threat?

[Read more: How to Conduct a Market Analysis]

How to conduct a team SWOT session

Conducting a SWOT analysis with your team can lead to better business ideas and a more accurate picture of your business. It brings different perspectives to the table and helps everyone feel invested in the outcome. Here's how to run a productive team SWOT session:

• Select the right people: Invite a diverse mix of team members from various departments or roles. This variety helps you get a well-rounded view of your strengths, weaknesses, opportunities, and threats.
• Set the stage: Explain what a SWOT analysis is and why you're doing it. Make it clear that this is a brainstorming session and that you value honest feedback.
• Work through each category: Start with strengths and move clockwise through weaknesses, opportunities, and threats. Give everyone a chance to contribute. You can use sticky notes, a whiteboard, or a shared document to collect ideas as you go.
• Group and discuss: Once all ideas are on the board, group similar ones together and talk through them as a team. This helps you identify patterns and prioritize what’s most important.
• Turn insights into action: Wrap up your session by deciding which items to act on first. Decide on the next steps, and consider creating a SWOT action matrix to guide your strategy going forward.

Common SWOT mistakes to avoid

A SWOT analysis can give you powerful insights into your business, but only if you do it correctly. The following mistakes can skew your results and make your SWOT analysis less effective.

Adding too many items to your list

A long, unfocused list can be overwhelming and make it hard to know where to start. Instead of trying to include every possible point, focus on the few that matter most. Stick to three to five key items in each category so you don’t become overwhelmed.

Conducting a biased assessment

It’s hard to remain objective when you’re evaluating your own company, so many people make the mistake of overestimating their strengths while underestimating their weaknesses. However, conducting a biased assessment can cause you to miss out on opportunities for improvement.

You can avoid this problem by asking for input from outsiders who don’t have a stake in your business. It’s also important to encourage your employees to be straightforward—let them know they won’t be penalized for their honesty.

Failing to prioritize

Listing your strengths, weaknesses, opportunities, and threats is only the first step. If you don’t take the time to sort through what matters most, your team can end up spinning its wheels. Focus on the items that have the biggest potential impact on your goals. Prioritizing helps you turn your SWOT from a list of ideas into a real business strategy.

Treating it as a one-time task

Your SWOT analysis should evolve with your business. If you complete it once and never update it, you risk making decisions based on outdated information. Plan to update your SWOT analysis regularly—at least once a year or after any major changes to your business or market conditions.

[Read more: How to Conduct Market Research]

SWOT templates and tools

If you're unsure where to start, using a template can make the process a lot easier. A basic SWOT template divides a page into four boxes—one for each category. You can sketch this out on paper, create a simple chart in Word or Google Docs, or use spreadsheet tools for a more organized layout.

There are also free online tools and software that can help guide your analysis. Platforms like Canva and Lucidchart offer customizable SWOT templates with drag-and-drop features and space for team collaboration.

If you’re looking for something more advanced, consider project management tools like Trello or Notion. These tools can help you turn your SWOT findings into action plans with checklists, deadlines, and assigned tasks.

[Read more: How to Conduct a Small Business Survey]

How to implement what you’ve learned

Conducting a SWOT analysis is only the beginning—the real benefits come from implementing what you’ve learned. Let’s look at the steps you can take to turn your analysis into actionable business strategies.

Prioritize your results

Not every item in your SWOT analysis deserves your immediate attention, so start by identifying the most urgent items. As you’re evaluating your lists, ask yourself the following questions:

• Which opportunities come with the greatest potential returns?
• Which weaknesses pose the biggest threat to your business objectives?
• What threats could cause the biggest problems if left unaddressed?

It's helpful to rate each factor on a scale of 1 to 5 in terms of the potential business impact and time sensitivity. Focus on the high-impact, high-urgency items first, then move to high-impact, low-urgency items for long-term business planning.

Turn strengths into strategic advantages

As you’re evaluating your business’s strengths, think about ways you could scale or replicate them. For example, if one of your strengths is a loyal and engaged customer base, could you build upon that by offering a loyalty program? By leveraging your strengths, you can capitalize on new opportunities and create a competitive edge for your business.

Look for practical ways to use your strengths across other areas of your business. If your team is known for providing excellent customer service, consider how this could differentiate you when entering a new market or introducing a new product.

If your team possesses strong technical skills, you may be able to offer training or consulting services to others. Instead of overlooking what you do well, look for ways to use those strengths to grow and improve your business.

Neutralize any threats

You can also use your strengths to safeguard your business against potential problems. For instance, let’s say a competitor enters the market offering similar products as yours at a lower price point. If you’ve built strong long-term relationships with your customers, you can leverage this strength by marketing exclusive deals or loyalty perks your competitors can’t match.

You can also neutralize threats by building a financial buffer, diversifying your suppliers, and upgrading outdated technology. The idea is to plan now so that future problems don’t catch you off guard.

Address weaknesses

Weaknesses don’t have to turn into major problems—unless you ignore them. Perhaps your team requires additional training in a specific area, or it’s time to replace outdated tools and systems. If something isn’t working well, fixing it could make everything run more smoothly.

As you work through your list of weaknesses, be honest about what you can realistically fix and the timeline. Some problems are easy to solve, while others may take longer and require more significant changes. Focus first on the weaknesses that are holding you back from taking advantage of opportunities or that leave you open to bigger risks.

Come up with SMART goals

Once you’ve listed out your opportunities, the next step is to make a plan for how you’ll take advantage of them. Instead of keeping things vague, turn each opportunity into a clear goal with a specific deadline and way to measure success.

Make sure each goal is clear, realistic, and has a timeline. Break the work into smaller tasks with deadlines, so your team knows what to do and when. Check in regularly to monitor progress and make adjustments as needed. The more specific you are, the easier it is to follow through and turn that opportunity into tangible results.

Communicate with your team

Once your plan is ready, make sure everyone on your team understands it. Go over who is responsible for what, set deadlines, and check in regularly to ensure things stay on track.

But don’t just hand out tasks—explain the rationale behind each decision based on your SWOT analysis and explain to your team how their work contributes to the overall picture. When people understand why something matters, they’re more likely to get on board and take ownership of the results.

Monitor and update as needed

Once your plan is in motion, keep a close eye on how things are progressing. Set a few key metrics to track—like customer feedback, revenue, or website traffic—so you can see whether your strategies are working. Use a mix of short-term and long-term indicators, and be prepared to make changes if something isn’t going as expected. Testing new ideas on a small scale can help you learn and adjust before making bigger changes.

Also, remember that your SWOT analysis isn’t a one-time project. As market factors change, your strategy should too. Check in on your analysis regularly and note what works and what doesn’t, so you can apply those lessons moving forward.

[Read more: How Business Intelligence and Analytics Benefit Business]

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.