SWOT is an acronym for Strength, Weakness, Opportunities and Threat. It is a very important business tool for existing and new business. It helps you to determine ahead of time the strength and opportunities of your product/service as well as the weakness and threat it could face in the market or the industry where you want to operate.
This simple tool helps you to identify and document the internal strengths and weaknesses of your business as well as external opportunities and threats. It is very vital to be able to differentiate between your internal and external factors. This means that, for example, whatever would exist even if your business never exist or go into extinction is an external factor. A good example is new equipment. Your internal factors are things that have to do directly with your business. A good example is competent employees.
Furthermore, it helps you to diagnose your business industry, external environment, regulatory requirements, competitive advantage etc, before starting out your own business. When you are able to spot your strengths and opportunities, automatically your weakness and threat can be easily managed.
Here is a practical guide on how to carry out your own SWOT analysis:
Highlight your Strengths
This is the first and basic step. You must be able to list what you consider to be the strength of your business. A very good example could be your skills/expertise, financial resources and unique selling point. It could as well be your existing patents, intellectual property, partnerships, collaborations and technical support you currently have or will soon secure, awards and recognitions you have achieved before that can make your brand stronger.