SWOT your way to a better business. Launching a new business requires you to make a significant investment, both of your time and your money. The last thing you want is to waste either of them.
Nobody goes into business expecting to fail, but success is often hampered by a lack of foresight and planning. Sometimes the flush of entrepreneurial excitement overrides the need to take an unemotional look at the feasibility of a business idea. Sometimes it’s just a matter of not knowing how to work out if your idea will fly. In either case, a SWOT analysis can be invaluable.
Performing a SWOT analysis on your business idea helps you easily visualise its pros and cons. It’s a tool that not only helps you understand if your idea is sound but also helps you identify things that you’ll want to include in your business plan.
SWOT stands for strengths, weaknesses, opportunities, and threats.
To perform a SWOT analysis on your business idea, you’ll need to make a list under each category. Strengths and weaknesses are internal elements, such as skills, location, assets, and connections. Opportunities and threats are external elements, such as competitors, costs, suppliers, and market behaviour.
Here are some questions to ask yourself in each category.
- What do you do well?
- Do you have the resources (both in terms of skills and assets)?
- What do you possess that gives you a competitive advantage?
- Is there anything you need to improve to be competitive or accomplish your goals?
- What resources do you lack (both in terms of skills and assets or technology)?
- Is your geographical location detrimental to your goal?
- Are there any gaps in your target market?
- Do you lack competitors in your area?
- Is there an emerging need for your product or service?
- Is your market over-saturated?
- Do you have a lot of emerging competitors?
- Are you subject to a regulatory environment, and if so, are there pending changes?
In terms of determining the feasibility of your business idea, you’ll be looking for more positives than negatives. Strengths like an untapped or underserved market, a unique selling proposition, strong, marketable skills, and resources should outweigh your weaknesses. There should be good opportunities and surmountable threats.
In terms of what you need to include in your business plan, you’ll want to look for ways to capitalise on the opportunities you’ve uncovered and decide whether there’s anything you should be adding to your offering. You’ll also want to address any weaknesses so that they don’t become a problem. That might involve upskilling in a particular area, working out ways to overcome a poor location, or sourcing more efficient technology or equipment.
If you’d like to perform a SWOT analysis, a template is included in the free start-up business plan provided by the Ministry of Business, Innovation, and Employment.
Once you’ve confirmed that you have a strong business idea and plan, don’t forget to secure your domain name (or names) for your new business. At Moreweb, you can purchase domains from a wide range of extensions, and each comes with a free mailbox. Learn more here.