SWOT Analysis for Startups
There are many analysis frameworks for startups to use to better understand their competitive advantage, conduct strategic management, and assess the performance of their company. A SWOT analysis is one of the most popular frameworks that considers four areas relative to your business performance.
What Is a SWOT Analysis?
A SWOT analysis is a business analysis framework that helps companies conduct strategic planning, monitor the market position, and detect impact from the internal or external environment. SWOT analysis focuses on identifying the business's strengths, weaknesses, opportunities, and threats.
The framework takes into consideration external and internal factors as well as the environment. While SWOT analysis is generally used to make important decisions about the business or the business strategy, it can also be used to assess initiatives and projects.
Why Is a SWOT Analysis Important?
A good SWOT analysis helps to provide valuable information about the state of your company, as well as blindspots you may not have noticed before. Above all, this framework provides a well-rounded overview of your business to identify weaknesses and threats and then leverage strengths to execute opportunities that will combat challenges your business may face.
When to Use a SWOT Analysis
The most common use of this type of analysis framework is during the early stages of strategic planning, when assessing market position, or before you take any major company action. Examples of this may include if you’re considering pivoting your startup or changing company policies.
You can also use SWOT analysis as a competitive analysis framework by completing the analysis using information gathered about your competitors. Then, compare the information to the analysis you’ve done on your own company to identify differences and similarities to hopefully result in a competitive advantage.
What to Include in a SWOT Analysis
A SWOT framework is composed of four categories: strengths, weaknesses, opportunities, and threats. These include internal and external factors that are currently impacting your business or may be in the future. Here are a few examples of SWOT analysis considerations for each category.
Strengths are the first category to complete. You may also think of these as internal factors that contribute to your competitive advantage. Your startup’s strengths can be a number of things: a high-performing staff, effective marketing strategies, a loyal customer base, or a strong, well-defined brand.
Secondly, you need to compile your business’s weaknesses or internal factors that result in necessary improvement. These internal factors may include outdated technology, high turnover, debt or lack of funding, or a weak brand and marketing strategy.
Finally, opportunities include external factors that could positively impact your business or contribute to its competitive advantage. These may include market shifts, fewer competitors, an idea for a new marketing campaign, or other external factors that may increase your competitive advantage.
Threats are primarily external factors that may negatively impact the success of your business. These external factors may include competitors, inflation, economic downturn, governmental regulations, or cybersecurity threats.
How to Write a SWOT Analysis
Now that you have a strong understanding of the information that should be included in your SWOT analysis, you can begin creating your SWOT analysis matrix.
A SWOT matrix is a 2x2 grid with each square holding one of the four areas of consideration: strengths, weaknesses, opportunities, and strengths. When structuring your SWOT analysis, put strengths and weaknesses at the top of the grid and opportunities and threats at the bottom. Typically, each section includes questions that may prompt you to identify the details that should be included in your analysis.
To create the most thorough and effective SWOT analysis, be sure to talk with your team. This helps to ensure you are including a well-rounded, comprehensive list of strengths, weaknesses, opportunities, and threats that you may not have thought of yourself.