4.5 SWOT analysis
Now that you have spent some time analysing your potential business, it is a good time to pull together your strengths, weaknesses, opportunities and threats (SWOT).
You will find that strengths and weaknesses come predominantly from the internal environment, i.e. things to do with the internal workings of the company. Opportunities and threats frequently arise from what is happening outside the company. Pulling together everything you know about your company both internally and externally is very useful. It informs strategy and guides day-to-day operations too.
A SWOT analysis usually comprises a series of points under each heading and behind each point you write will be a great deal of analysis that has informed your view. Include only the most important points – that is, those that will have the greatest impact on strategies and programmes of activities that are developed. Clearly the internal points, the strengths and weaknesses, are easier to influence and control as they occur within the business.
Consider the value cycle in the last subsection as you complete your analysis. Examine the process for strengths and weaknesses. Look at opportunities and threats in the context of such a process as well.
Opportunities and threats generally occur outside the business. They cannot necessarily be changed or influenced by the business or the business owner – certainly not in the short term.
It is better to have a few well-informed and pertinent points than a long, superficial list in your SWOT analysis. It is also important to consider all the points together, as they may be interlinked and interactive.