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Running your own business is exciting, but you also to do it with caution and care. A SWOT Analysis is a great tool for entrepreneurs. A common analysis technique used by businesses and investors, but its not just for large companies and corporations. It can also be used by new and experienced entrepreneurs, too.
What is SWOT?
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. To understand what each of these are, lets look at them separately.
These are things you’re good at doing. They give you an edge against competition. What can you offer your customers that no one else can as well? What is going to bring business to you instead of them going somewhere else? Knowing your strengths helps you capitalize on them. Use them as the highlight of your advertising and in your presentations to investors. If you are just starting out, you may not realized what your strengths are, ask others you can trust to give you good feedback. Spend some time with pen and paper in hand and jot down ideas then from those focus on those you feel are your strongest strengths.
When searching for your weaknesses, take a hard look at you do well and what is a struggle. One way to find your weaknesses is to look at it from your customers’ perspective. Does it seem people hestitate to buy your products? Do you have trouble getting your message across to potential customers? Do you have trouble keeping organized and lose things? Or maybe you feel your marketing skills are keeping your business from growing. Be honest with yourself. Ask a trusted friend or collegue to help you discover these.
A good business owner aware of the strengths and weaknesses of their business. That’s because those things are right in front of them, staring them in the face. The benefit of the SWOT method is that it looks outside the business at the outside world. A business can have many strengths and few weaknesses, but if it’s operating as if it’s independent from everyone else, it’s still likely to fail. That is where analyzing opportunities and threats comes in.
Opportunities is looking at the ways your business can grow. This could be expanding with new products or new market, or it could be as simple as hiring a virtual assistant who can take over those areas you are weak in and let you focus on your strengths.
A good entrepreneur will find opportunities and do their best to expand into these areas. The important part is knowing which opportunities are the best ones so you don’t go in every direction and spread yourself too thin. That seems to be commone among entrepreneurs. We see a lot of great opportunities, but we have to make choices because we cant do it all.
These are things in the outside world that threaten your business. They could be anything from competitors in your market, to new laws and regulations or new technology that could take a bite out of your business. While you can’t protect against every threat, you can be aware of them and make back-up plans to protect yourself and your business. I would also add threats as those things that can affect your success including self-doubt, lack of focus, lack of planning and lack of follow through. These can be just as bad as outside threats.
While it’s great to sit down and think about these factors, it’s more important that you learn how to use them. Once you know your strengths and weaknesses, you will want to research and apply techniques to grown and use your strengths to your advantage and find solutions for your weaknesses. You also need to work on protecting your business against threats and finding ways of venturing out into new opportunities.
On top of all this, remember to balance all four of these things and not just focus on one.
While SWOT is obviously not an all-encompassing analysis technique, it is a great way to get started and get yourself thinking realistically about your business. Doing your research will also help you learn your area and even get you started on making business connections.