SWOT Analysis

August 18, 2008

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I find it strange that the online business person seldom mentions the favourite tools and techniques used by the offline world for decades. SWOT Analysis is a typical example.

SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favourable and unfavourable to achieving that objective. The technique is credited to Albert Humphrey, who led a research project at Stanford University in the 1960s and 1970s using data from Fortune 500 companies.

The SWOT Analysis offers you an excellent way of examining a niche market before investing your valuable time or hard earned cash.

By looking at your own, or your businesses, strengths and weaknesses and by analysing the opportunities and threats in the market and external environment, you can gain valuable insights that are often missed by the impatient, or inexperienced.

Here are some basic questions that will kick start the process for you:

Strengths:

• What do you do better than anyone else in this niche?
• What are the top five features that your business offers?
• What is your most valuable personal or business asset?

Weaknesses:

• What would you describe as your biggest weaknesses?
• What activities do you tend to avoid?
• What, if anything, do your customers complain about?

Opportunities:

• What is “State of the art” in this specific niche?
• What are the most promising trends facing you and your business?
• Is there any potential in new technology, social patterns, legislation?

Threats:

• Does the current economy show any negative trends?
• What are the five greatest barriers to success in this niche?
• Do changes in technology or government policy threaten your business?

By reviewing the answers to above questions, together with any additional questions you would like to add, you should be able to identify how to leverage the strengths and opportunities and how to overcome any weaknesses or threats.