Make SWOT Analysis in 4 Easy Steps

SWOT analysis is a tool for planning, especially strategic planning for your company. Follow these four easy steps to make SWOT analysis for your small business.

You can use SWOT analysis to evaluate Strengths and Weaknesses as the internal elements, and Opportunities, and Threats as external elements of your business. SWOT analysis can have a broad range of application.

However, often SWOT analysis begins and ends with the SWOT matrix. The SWOT matrix is the quadrant in which you list all SWOT elements. In such a way, you cannot achieve the full benefits from this analysis. For example, you create the matrix, and it looks perfect. But, the question is what you need to do next to improve your business.

As you can see, you will need to do something after you develop the SWOT matrix. So, you will need action steps. But, the action steps are the results of strategies.

According to this logic, the result of your SWOT analysis will need to be strategies with appropriate action steps to achieve the goals covered with each of the strategies from the analysis.

The following illustration presents a complete diagram of the SWOT analysis which begins with the scanning of the internal and external environment of your company.

SWOT Analysis Step #1: Scanning External and Internal Environment

One thing that is evident for each business is that they have the external and internal environment. The SWOT analysis will always begin by evaluating the current situation in respect of the internal and external environment of the company.

This evaluation of the current situation will lead to the identification of internal and external factors that can influence your company. The internal factors can be strengths, but also some of them can be a particular type of weaknesses of your small business.

On the other side, the external factors can be opportunities or threats to your small business from outside. In this section, you will need to find all factors and list them according to the importance of your company.

Questions Related to Scanning External and Internal Environment

The questions that you will need to answer here are following:

1. What are legal factors that influence my business?

2. What are environmental factors that have the impact on my business?

3. What are political factors that affect my business?

4. What are economic factors that have the impact on my business?

5. What are social factors that have the impact on my business?

6. What are technological factors that influence my business?

7. What are competitive factors that have the impact on my business?

8. What are managerial factors of my business?

9. What are strategic factors of my business?

10. What are structural factors of my business?

11. What are the goals of my company?

12. What are operational factors of my business?

13. What are technological factors of my business?

14. What are cultural factors of my business?

15. What policy do I implement in my business?

16. What are factors related to leadership in your small business?

As you can see answering this 16 question you can simply find the most crucial factors from the external and internal environment of your company. Also, you need these factors to conduct a SWOT analysis.

First seven questions are related to the external environment using LE PEST C acronym. The next nine questions are related to the internal environment (formal and informal subsystems of your company). The formal subsystems questions are questions from 8 to 13 while informal subsystems questions are questions from 14 to 16.

SWOT Analysis Step #2: Internal and External Analysis

In this step, you will need to analyze your internal and external environmental factors that influence your company. The purpose here is to decide whether an internal factor is strength or weakness of your business and whether an external factor is an opportunity or threat for your company.

Questions Related to Internal and External Analysis

The questions that you will need to answer here are following:

1. Which legal factors are your opportunity and, which of them are threats to your business?

2. Which environmental factors are your opportunity and, which of them are threats?

3. Which political factors are your opportunity and, which of them are your threats?

4. Which economic factors is your opportunity and, which of them is your threat?

5. Which social factors is your opportunity and, which of them is your threat?

6. Which technological factors are your opportunity and, which of them is your threat?

7. Which competitive factors are your opportunity and, which of them is your threat?

8. Which managerial factors are your strength and, which of them are your weakness?

9. Which strategic factors are your strength and, which of them are your weakness?

10. Which structural factors are your strength and, which of them are your weakness?

11. Which goals are your strength and, which of them are your weakness?

12. Which operational factors are your strength and, which of them are your weakness?

13. Which technological factors are your strength and, which of them are your weakness?

14. Which cultural factors are your strength and, which of them are your weakness?

15. Which politics are your strengths and, which of them are your weakness?

16. Which leadership factors are your strength and, which of them are your weakness?

SWOT Analysis Step #3: Construct the SWOT Matrix

Until now you have already listed all influential factors from inside and outside your company. Also, you classify them as strengths, weakness, opportunities, and threats. Now you can continue with the construction of your SWOT matrix.

SWOT matrix is a single quadrant constructed from SWOT acronyms and in each quadrant, you need to place each one of already identified factors. This is an excellent graphic presentation of what is right and what is wrong in your company, and what you can expect as an opportunity or threat.

SWOT Analysis Step #4: Define SWOT Strategies

What’s next? Is this enough to conduct the SWOT analysis? You need to know when you are analyzing that at the end of the process you need to expect future directions for next actions.

If you stop here, you can not say that you have made a successful analysis. Therefore, for each combination of quadrants in the matrix, you must determine specific strategies for your company. From the SWOT matrix, you can extract four different strategies:

• S-O Strategies (Strength-Opportunities Strategies). These strategies should enable your company to use all advantages that come from opportunities and use all already significant strengths of your business.
• W-O Strategies (Weaknesses-Opportunities strategies). These strategies should enable you to work to overcome all identified weaknesses of your company while you will use the opportunities from outside your business.
• S-T Strategies (Strength-Threat Strategies). These strategies should allow you to use your internal strengths, while you will work to eliminate or reduce the threats from the environment.
• W-T Strategies (Weaknesses-Threats Strategies). These strategies should allow you to eliminate all identified weaknesses and prevent external threats from outside your company.

Questions Related to SWOT Strategies

The questions that you need to answer here are:

1. What are my S-O Strategies?
2. What are my W-O Strategies?
3. What are my S-T Strategies?
4. What era my W-T Strategies?

SWOT analysis that will give you results in the form of strategies for dealing with the current situation and prepare for the future and that covers both internal and external factors is a useful defense mechanism for each company.

Next: SWOT Analysis Template