Strengths, Weaknesses, Opportunities, Threats (SWOT)

In this edition of Alphabet Soup we take a look at Strengths, Weaknesses, Opportunities and Threats, also known as SWOT (pronounced "swat").

A SWOT analysis is a technique used by businesses to help them plan for success. If they know their strengths and the opportunities available to them, they can take advantage of them. If they know their weaknesses and potential threats to their business, they can be prepared to deal with any problems that arise from them ahead of time.

What are Strengths, Weaknesses, Opportunities and Threats?

• Strengths: A business or company’s strengths are positive traits within the business, things they have control over. This can be anything from a loyal customer base, to a unique product or service, to skilled employees. Ideally the list of strengths will include things which set your business apart from the competition - things you can focus on in your own marketing.

• Weaknesses: The weaknesses of a business or company are anything they need to improve on, any internal factor that detracts from the business in any way. Examples of weaknesses are a lack of funds, a less than ideal location, and high employee turnover. Every weakness discovered is an opportunity for growth. There are no perfect businesses without weaknesses. 

• Opportunities: Now, opportunities are often an external factor that, if the business or company can properly take advantage of it, can help contribute to their success. These can come in a variety of forms, such as changes in government policies, market growth or trends, events, and technological advances. Internal opportunities to improve on processes, free up labor through automation, or otherwise streamline and improve the company.

• Threats: A negative external factor, threats can damage a business or company. Anticipating potential threats is the key to dealing with them. Potential threats include labor shortages, supply shortages, additional competition, and changes in the market. The rise of artificial intelligence poses a host of novel and as-yet-unknown threats in nearly every corner of the economy, so it behooves any business based on cognitive labor to keep an ongoing eye on the impacts these tools are having in their industry. 

As a general rule of thumb we like to do an annual review of our business from top to bottom and part of that process is a SWOT analysis. More often that not these are done as a simple grid - we provide you a link to SmartSheet's Google Doc template below.

If you've never gone through the process of thinking of your business through this lens you may find it quite helpful.

Learn More:

Investopedia: How SWOT Analysis Works

SmartSheet: Google Docs SWOT Analysis template