Conducting a comprehensive SWOT analysis for startups is key when looking to explore and understand the potential growth of your business. A SWOT analysis can help you see your startup from different perspectives and angles that you may not have before. The word is an acronym for strengths, weaknesses, opportunities, and threats.
Whether this is your first time hearing of a SWOT analysis or if you’ve come across it before, conducting a comprehensive analysis on a regular basis is the key to success. The uncertainty of today’s age and the stress placed on the global economy has caused businesses across the globe to find a way to capitalize on the situation, it is here that a SWOT analysis can assist you in planning your way forward.
In this post, I’ll be covering:
- Who should create a SWOT analysis?
- Implementing SWOT analysis
- A SWOT analysis for startups helps them succeed
- Final thoughts
If you’re finding yourself a bit confused with all of the technical terminology, take a look at our post “Financial Terms Jargon Buster – A Simple Glossary”.
Who should create a SWOT analysis?
Put simply, a SWOT analysis for startups is a brainstorming process that helps business leaders develop clear business strategies that aim to maximize company growth.
Strengths are seen internally
- These are the positive attributes of your company that you have control over
- Usually refers to your employee skills, resources, brand, and capabilities
- Discovering your strengths helps you use them to your advantage
Weaknesses are the opposite of your strengths
- They are internal characteristics that give a negative attribute
- These are aspects that hinder your strengths
- By identifying your gaps, you can find ways to improve and instead back your strengths up
Opportunities are usually external factors
- They are factors in your organization that have a high probability of bringing success
- This could be new technological improvements, a business venture, or possible company expansion, etc
With opportunities, come threats
- These are impeding factors that you have no control over
- The only way to counter this is to devise a solid contingency plan to deal with them when they occur
The most obvious answer to who should create a SWOT analysis would be the startup leader, which is not entirely correct. As the leader, you need to spearhead the creation of SWOT; however, you should not do it all alone.
In order to see your business from different perspectives, you cannot be the only one to work on the analysis. You need fresh eyes, fresh ideas. Whether you choose to gather the stakeholders of the organization or hire an external business consultant, when conducting a SWOT analysis for startups, the more information and ideas the better.
Customer and vendor surveys and feedback aid in strategic planning, as they can help you to see your business through their eyes. As customers and end users are a primary concern, their feedback is a huge factor and should be prioritized.
A SWOT analysis for startups helps them succeed
SWOT analysis is a tried and tested method used to map the future success for businesses. As a startup, this business analysis serves as a stepping stone to move forward. There are a number of benefits that a SWOT analysis for startups can provide, I’ve listed the top 3 below.
It helps to reduce risks
- SWOT analysis helps businesses realize their weaknesses (a potential risk in itself)
- Without improvement, these drawbacks can create more damage to an organization
- A SWOT analysis can find ways to counter each threat identified to leverage it into a strength
- This can help a company improve its viability and reduce, if not eliminate, threats
It can help improve business performance
- By incorporating each strength with external opportunities
- A SWOT framework helps identify what the business does well and advises how to leverage that for optimal success
It assists with competitive strategy
- Market competition is a key factor that each company should consider
- SWOT framework helps identify how competitors are faring and how they have an advantage
- By analysing competitor data, businesses can find a way to attack the opponent’s weakness and, at the same time, improve their faults and leverage their strengths
How to create a SWOT analysis
A SWOT analysis for startups is about a strategy building framework. Once you’ve gathered the people for brainstorming, commence the idea-sharing. But then the more people you have, the more chaotic a meeting will be. For an organized SWOT meeting, let each attendee create their SWOT analysis and perhaps list their items on a whiteboard under the applicable columns.
To guide you in identifying which belongs to the columns, here are guide questions for you:
- What processes are successful?
- What assets do you have in your team, and which is the strongest?
- How secure is your customer base?
- What gives you the edge from your competitors?
- How skilled is your workforce?
- What does your customer say about you?
- What hinders your production process?
- In what areas does your competitor have an advantage on you?
- What knowledge does your workforce lack?
- Is the level of workforce skill lower than standard?
- Do you have enough funding?
- Is your customer base too low?
- Is your business making a profit?
- Are you falling behind your competitors?
- Listen to Startup Hustle Podcast
- In what way can you turn your strengths and weaknesses into opportunities?
- What actions should you do now that has not been done before?
- What are the current trends that you can leverage?
- How is the field changing, and how can you take advantage of this change?
- Which businesses could support us? What can we do to help them in return?
- Are there upcoming events that the company can participate in growing your customer base or presence?
- Who are your running and emerging competitors?
- If you have suppliers, are they capable of supplying the materials you need at a given period and price?
- What future technological change can affect your business?
- Is your business prepared for unforeseen situations such as a global pandemic, financial instability, or natural calamity?
- What trends can become a significant threat to your business?
SWOT analysis should not merely sit on papers. Once you’ve seen the results of the data gathering, take actionable strategies to leverage viability, eliminate drawbacks, grab favorable circumstances, and manage possible risks.
In business, whether at its formation or well into its lifespan, it is key to be able to identify room for improvement, plan for growth and assess current and potential strategies. Just as with a SWOT analysis, businesses should be analysing their financial performance in order to plan for the future.
With Brixx, a cash flow forecasting and financial scenario modelling tool, startups, businesses, and advisors are able to explore and visualize potential business outcomes based on today’s decisions.
If you’re the leader of a startup, you may find some of the articles below useful. Be sure to explore the Brixx Blog for more information on successfully planning for and growing a business.
- “18 Actionable Cash Flow Forecasting Tips for Small Businesses & Startups”
- “Financial Projections Guide for a Startup Business Plan”
- “How to Choose the Right Infrastructure for Your Startup”