Surely you’ve heard about SWOT analysis from our materials before.
After all, it is part of CASUAL Formula, the methodology we recommend for online shops at the beginning (and not only).
SWOT analysis is a useful tool no matter where you are right now, and although it is not a complete exercise that will give you all the answers, it provides a basis from which to start building the right strategy for you and your business.
Let’s discuss in detail what a SWOT analysis is, how to do one, when you need one, and what to do after you’ve completed all the answers to the exercise.
Contents SWOT analysis: what it is, how to do it and why you need it
What is SWOT analysis and why do you need it?
As I said above, SWOT analysis is a exercise, a framework from which to start when you want to think of a strategy.
Its purpose is to make you look at the subject of your analysis from four points of view, in the most objective way.
The subject of analysis can be Your business, your business idea, a marketing campaign idea, your team or even you as an entrepreneur.
In practical terms, it means taking a sheet of paper or opening a document, divided into 4 blocks.
- Tar Pointsi (Strengths)
- Weaknesses (Weaknesses)
- Opportunities (Opportunities)
- Amenintari (Threats)
Fill in the correct answers for each block of text.
This way, you have access to a real overview, on which you can base your strategy so that it brings the results you want.
How does SWOT analysis help you?
- Helps you see where you are in the market, how you can grow as a business and what parts of your business are vulnerable.
- You can quickly identify the factors that sustain you on the road to success.
- You can identify hidden opportunities, so you can give your business a boost at the right time by making good decisions.
- Do you understand what the weaknesses of your business so that you can manage them before they affect your profits.
- Locate risks and threats so you can minimize or eliminate them before they affect you.
- You have at your disposal extensive information that gives you the time you need to act, ahead of the competition.
- Helps you to form a growth strategyoffensive or defensive, personalized for your business.
The SWOT analysis has its limitations, too, which mainly depend on how you go through it.
For example, you may feel that your business has certain strengths. Let’s say you always have quality products. However, if you look at it from your customers’ perspective, you may not always be able to deliver quickly when they want it.
So your quality products aren’t strong points, because they’re not accompanied by the service your customers expect or they’re not delivered in the timeframe they want. You have no consistency.
On the other hand, many entrepreneurs cannot identify their weaknesses correctly. They refuse to see them, don’t accept them, or don’t even want to think about them.
When doing a SWOT analysis, it is vital to take into account testimonials and feedback from customers, partners, team and any other stakeholders.
Only when done objectively can the analysis help you evolve as an entrepreneur and as a business.
Read also: What is SWOT analysis and how it helps you to develop personally
How to do a SWOT analysis
Before you start filling space on paper, it’s vital to have gathered real, subjective and objective data.
- Financial details
- Traffic and conversion data
- Customer satisfaction data
- Your resources
- Competition data
- Market statistics
- Reports on product performance
- Team performance data
- Data on activities performed (sales, marketing, logistics, partnerships)
After doing this research, you will have a lot of data about your business, your market and your competitors.
Now it’s time to put them into the matrix, into the four quadrants of the SWOT analysis.
Strengths are about introspection. You look at the internal factors in your business.
These are the things you’re best at, so they propel you higher than the rest of the players in your market.
This is where you need to consider not just your perspective, but what your customers are saying.
Here’s how to make it simple for you:
- Write a list of features and benefits that come to mind when you think of your company.
- Mention here keywords taken from stakeholder feedback (customers, partners, suppliers, team).
- Compare them with what your competitors offer.
For example, as I said above, if you note there that you offer superior products – but your competitors do – that’s not a strong point, but a necessity generated by market expectations.
- Look at your product catalog – is bigger than what’s on the market? Do you sell specific products on a micro-market that differentiates you?
- Look at logistics and delivery – Can you make it faster, cheaper or safer than the others?
- Return policy – is easy for customers to understand? Does it offer an additional reason for trust?
- Team – how do interactions between clients and colleagues go? Do you often get feedback on how satisfied they are with your support?
Once you figure out what your business strengths are, it will be easy to focus on them to get better results and the right strategy for growth.
Weaknesses are usually harder to identify because it takes objectivity to deal with unpleasant and possibly unanticipated things.
Your goal is to find out what is putting obstacles in the way of your business and what your competitors are doing better.
These are the weaknesses an online store might have:
- Low financial resources – Is the budget you have available preventing you from growing your sales and business?
- Logistics – For example, if you sell perishables, bulky or heavy products, you may have higher costs than other stores, which leads to a decrease in profitability.
- Lack of a clear USP – Are you sure you have found the differentiators from competitors?
- Micro-annotation – can only sell certain types of products, for which you have a super limited range of customers.
- Payments – You may only have one payment method on your site, and customers may want more than one (e.g., if you sell expensive products, they may also want the option to pay in installments).
Weaknesses are still related to things inside the business, but it doesn’t hurt to take into account here what your customers say.
Ask them what they would improve in your shop or online offering and consider the answers they send you.
Opportunities are scenarios to take advantage of in order to improve your position in the market, based on the resources you already have at your disposal.
They can take many forms:
- Evolution of technology – Using the Shopify platform, for example, gives you the opportunity to stay on top of eCommerce news and trends.
- Increase in demand for your products – Economic changes, influencer recommendations, an event – all of these can lead to an increase in demand for the products you sell. These are opportunities you can take advantage of or generate yourself.
- Changes in legislation – Just look at what has happened in the last 2 years with the demand for masks and disinfectants. Due to legal changes there has been a real explosion in this niche.
- Niche on the rise – if you identify a less explored but potential niche and act ahead of others, you have the opportunity to grow your audience and sell more.
Focusing on finding your strengths can also lead to awareness of opportunities you haven’t seen before.
In the same sense, you can generate more opportunities when you address one or more of your weaknesses.
Threats come from elements outside your company.
There are potential changes in your market or country that directly affect your business growth.
For example, one threat was the 2020 legislative changes for restaurants and event halls. Or the strategic moves of market giants that can enter your niche when you least expect it.
To identify potential threats ask yourself these questions (no matter how unlikely they seem at the moment):
- There are certain legal obstacles what could slow down your business?
- Is it possible that my niche may be attractive to one of the big retailers in the market?
- My competition is growing very fast?
In other words, ask yourself anything that you think might pose a risk to your business or its growth potential.
Complete the 4 quadrants and be ready to use the data you get to improve your strategy.
When to do a SWOT analysis
SWOT analysis can help you at various points in your business:
- Before you open your business – do an analysis for your business idea, taking into account the market research and data you have available. It will help you realistically understand your potential and set the right expectations.
- When you want to create a special marketing campaign – in this context, you are prepared to invest a substantial budget. So a SWOT analysis will help you to prepare your campaign as well as possible, so that you get the most out of your budget.
- Every 6-12 months – SWOT analysis should be a routine exercise you do periodically for your business. It helps you to stay aware of the status of your business in the market, so that you can make the best decisions for the direction you will take next.
- When you reach a standstill – your business grows, grows and at some point it seems like it can’t go beyond a threshold, it stagnates. When you feel this happening, do a SWOT analysis and see what’s stopping you from moving forward.
- When looking for investors – most investors will ask you for this kind of data about your business (even though they may not call it a SWOT analysis).
There are various times when a SWOT analysis can help you focus and find your direction.
Apart from the above situations, do a SWOT analysis whenever you feel the need (when you are preparing a project, when you want to make or redo a strategy, etc.).
You did a SWOT analysis. Now what?
Basically, you now have a complete picture of your business. It’s time to use the data in the dial for whatever purpose you want:
- To improve your strengths: Emphasize them, highlight them in marketing materials and find ways to accentuate them.
- Deal with weaknesses: Neutralize or resolve them as quickly as possible, in order of priority.
- Reduce the impact of threats: be aware that you can’t always control them, but because you know what they are, you can create a pre-emptive plan and damage control.
- Make the most of your opportunities: Keep track and take advantage of them to set SMART goals.
These activities can be done regularly.
You can also incorporate them into your strategy when you want to launch a campaign, when you are looking for investors, when you want to attract talent to your team, when you want to scale your business, when you want to organize a network of ambassadors and partners, etc.
SWOT analysis gives you the opportunity to be prepared.
In eCommerce, your place in the marketplace changes from day to day. Having organized data at your fingertips is a godsend.
If you’re prepared at all times and can predict the next steps the market is taking, you’ll keep up with it to reach your goals and get the results you want.
Use SWOT analysis in your business, marketing, sales and growth plans.
It’s an exercise that will help you increase your productivity and efficiency. Remember that sometimes it takes days or even weeks to complete a good SWOT analysis.