Want a worthwhile way to breathe new life into your business this year? Then it’s time to sit down and do a SWOT analysis to get a clear (read: honest) look at how you’re holding up.
Who cares if we are halfway into January, you can do a SWOT analysis anytime and benefit from it. We’re giving you the facts you need to know about what a SWOT analysis is, why it is worthwhile and how to do one for your own business.
What is a SWOT analysis?
The term “SWOT” is an acronym that stands for “Strengths, Weaknesses, Opportunities and Threats.”
A SWOT analysis is, at its core, a way to help you move forward with a plan based on what you learned from looking at the past, examining both the internal factors of your business that you can control and the external factors that you can’t.
[It} “helps you identify areas your business can improve and maximize opportunities, while simultaneously determining negative factors that might hinder your chances of success.”Caroline Forsey – SWOT Analysis: How To Do One
Why it pays to do a SWOT analysis for your business
Maybe you are someone who likes to ”trust their gut” when making business decisions. While intuition can come in handy, it doesn’t mean you should ignore the benefits of an assessment or not rely on its data to help you make informed decisions. A careful analysis of your business can make it clear to you just how much more successful and lucrative it can be.
Let’s look at an example. You primarily market your business through social media and you are currently doing so using three different platforms. A SWOT analysis helps you examine if you are getting worthwhile returns from all of your social media accounts, determine how well your content strategy for each platform works and identify what roadblocks or problems have impacted your business the most. Knowing these things can help you more easily make a robust marketing plan for the next year that may very well take your business to the next level.
“How does a SWOT analysis work?”
We’re glad you asked. As we explained above, this audit identifies your business’ strengths and weaknesses, and highlights the biggest opportunities and potential threats that may pop up in the market. We’ll give you a bit more detail on what constitutes each of these four categories and (as a gift) we will give you a handy guide to help you perform your own SWOT assessment.
Below, we’ve added more details about each of these categories to make them easier to understand, along with an example so you can see a SWOT in action.
Please meet our completely made up company: La Rouge, Inc. This is a small business based on the East Coast that seeks to provide niche products that offer skincare and makeup in one package. We’ll walk through their goals and then outline what their SWOT might being up.
Make a goal
The first step is to set a goal. There is a lot to analyze for any brand or business. Trying to tackle everything at once can prove overwhelming. You can perform more than one analysis, but try to focus on one subject for each one such as your social media strategy or your approach to launching your products.
Once you define that goal, use our template to assess your business’ strengths (where it excels, its weakness (those pesky stumbling blocks), possible opportunities (areas to sell more or improve retention), and your biggest threats (industry changes or challenges that can detour your customer base away from you).
Find your strengths
If someone came up to you and asked what made your business or brand amazing, what would you say? This is the time to (reasonably) brag! Your strengths can include:
- A strong brand voice that is recognizable across channels
- Good returns on your investments in paid social media ads
- A well-thought-out content strategy
- An eye-catching window display that draws in a crowd
Let’s take a look at La Rouge, Inc. When they looked back at their previous year, they discovered that they rocked the market with three successful product launches that brought in hundreds of new customers and they retained a majority of them with their branding and engagement.
Identify your weaknesses
Knowing your weaknesses can help give you an idea of what you need to improve the most. Hubspot advises that it may be helpful to get input from employees, as they might point out weaknesses that you may not have thought of. These may include:
- Negative community interactions giving a brand a bad name
- Too many expenditures on marketing efforts that have little to no returns
- High interaction rates but low conversions
While managing those increased orders, it was all hands on deck for La Rouge. Though they were excelling with getting eyes on their website, they hadn’t actually updated their Instagram or TikTok in a long while. This led to fewer interactions and left room for unaddressed messages and product reviews. Sound familiar? It may help to learn more about brand photography and why it can pay off for your business.
Look for potential opportunities
When you started building your brand or business, it was because you saw an opportunity that you wanted to make the most of. Now it is time to do it again. Brainstorm where you want things to go next! You can consider opportunities such as:
- Increasing the number of posts made each month
- Hiring someone for website or social media management
- Launching a new product and making a certain number of sales by the end of the year
- Increasing your interactions and conversions to double that of what you did last year
Wintertime is here again and La Rouge is ready to charge ahead with more moisturizing products. This company is highlighting their hydrating products to get in on the hype for keeping skin healthy throughout the coldest month of the year. Along with this, they’re already planning for a new product line that is themed for the Year of the Dragon.
Check for possible threats
There are plenty of things out there that none of us can control. You can’t stop a market crash or prevent an earthquake, but you can assess the biggest or most prevalent threats that your business may face. Those might look like these:
- Issues that can hinder your social media growth
- High losses due to product losses or damage (mount that display case!)
- Construction reducing people’s access to your storefront
- Platform changes that may reduce your follower count (see: Twitter/X)
The team at La Rouge understands they aren’t the only company out there that sells skincare and makeup products. The market is saturated so standing out can be tough. They are focusing on finding ways to not only stay relevant this year but also not to be relegated to becoming “just another makeup brand.”
Analyze the results
Now that you have a better idea of your brand’s strengths, weaknesses, opportunities and threats, it’s time to implement your findings. Those strengths can be magnified to help improve their effects and you can plan ahead to prevent or reduce the impact of potential threats.
Looking at La Rouge one last time, we see that they are building on what worked for their product launches last year to help guide their big Year of the Dragon launch in the new year. They are also refreshing their Instagram and trading TikTok for a Pinterest account to help grow their ecommerce business. in order to combat declining brand recognition and audience retention. Oh, and to be safe, they are weather-proofing their brick-and-mortar stores on the East Coast to reduce the chances of losses due to product damage.
Tips for an effective SWOT
A SWOT analysis isn’t a small endeavor. So it is best to make sure that your approach to yours is going to actually pay you back. When you sit down to try to do your SWOT, remember some of the following tips:
- Get your data before you get started. Creating a spreadsheet of all of your website traffic and your social interactions takes a long time and may take over your analysis.
- Break down your SWOT into categories. We mentioned this above briefly but it is best to break up your analysis into their different “departments.” Do a SWOT for your website, your product development and delivery pipeline, and your digital marketing approach.
- Be honest and get your team’s opinion. It may be tough to look at your business in an unbiased way (we get it cause you worked hard!) It can help to talk to your team members and see what they have noticed. It can also be a great idea to reach out to a third-party like us to help you out. If you have the resources available to afford a SWOT analysis, gift yourself some free time by handing the task off to our team.
It isn’t always easy to analyze and assess the state of your business, especially if you aren’t entirely sure what is going on in the current ecommerce market. That’s why it may be a good idea to “gift” yourself a SWOT analysis. There is nothing wrong with recruiting a marketing pro for an impartial and well-informed look at where your business is and, better yet, where it can go next.