Skyrocket Your Small Business Success with a Simple SWOT Analysis

Every business has strengths to build on, weaknesses to improve, opportunities to chase, and challenges to prepare for. A simple way to bring all of this into focus is through a SWOT analysis — which stands for strengths, weaknesses, opportunities, and threats.

This easy-to-use framework gives small or medium sized businesses (SMBs) a clear picture of where they are now and how to plan for the future. In this guide, we’ll explain what a SWOT analysis is, why it’s useful, and how you can start using it with your team today.

Here’s your guide to SWOT: 

• What is a SWOT analysis?
• Why is a SWOT analysis important?
• Four key elements of SWOT analysis for small business
• How to conduct a SWOT analysis for small business
• SWOT analysis example: a small business case study
• What’s next for small businesses?

What is a SWOT analysis?

The term ‘SWOT’ stands for strengths, weaknesses, opportunities, and threats. By identifying how your business stacks up within these four categories, you can find strengths and potential weaknesses and identify long-term competitive differentiation and potential threats. SWOT analysis is a strategic planning and management technique that’s sometimes called situational assessment or situational analysis.

• Strengths: Advantages that your business has over competitors.
• Weaknesses: Elements that aren’t operating efficiently, indicating areas for improvement.
• Opportunities: Areas where your business can gain a competitive advantage after understanding strengths and weaknesses.
• Threats: External factors that your business can’t control, that you need to prepare for.

Why is a SWOT analysis important?

A SWOT analysis includes both internal and external factors. Internal factors (strengths and weaknesses) are those that businesses can control or change. External factors (opportunities and threats in the wider economy) are those that lie outside of a business’s control. SWOT analysis allows you to ensure the following for your small business:

• See the big picture: A SWOT analysis helps you step back and look at your business from all angles — what’s working and what’s ahead.
• Make smarter decisions: It gives you clear facts to base your decisions on, whether you’re planning to grow, cut costs, or try something new.

Stay ready for change: Business moves fast. A SWOT helps you stay alert to trends and chances to improve before others do.

Four key elements of SWOT for small business

Your small business will focus on these four categories during a SWOT analysis:

1. Strengths

Your small business’s strengths are a sign of its main advantages in the marketplace. Strengths can include a one-of-a-kind product, or excellent service and post-sale communication. Ideally, your competition doesn’t easily replicate your strengths. 

For example, your company may have a unique, patented product, or a highly loyal customer base. These things are difficult for your competition to replicate.

2. Weaknesses

These are the elements of your small business that aren’t operating as efficiently as they could and might hold you back from competing effectively. Your small business might lack experience in design, or you might be using outdated systems that don’t talk to each other. Your business’s weaknesses are a sign of what it needs to do better to operate at peak efficiency. 

For example, your company might be failing to generate repeat purchases due to poor after-sales communication and a sub-optimal customer journey. You could improve this by increasing staff training, or by automating sales processes.

3. Opportunities

Opportunities are areas where your business may gain a competitive advantage. They can present themselves at any time, and even sometimes out of the blue. You can ensure your small business is ready to take advantage of them whenever they arise. After identifying your strengths and weaknesses through SWOT analysis, you can understand how you are positioned to capitalize on potential opportunities, and where you might need to improve. 

An opportunity can be anything from a competitor’s misstep to a changed government law, to weather that impacts your competition’s supply chain.

4. Threats

We live in an unpredictable world, and threats can come at any time, from changing regulations to shifts in customer priorities. Threats are external factors, as they’re things that your small business can’t influence. But you can try to future-proof yourself in key areas and mitigate your weaknesses.

Automating processes can make you more efficient, so you can focus more on keeping customers happy. Making contingency plans using digital solutions can help operations run smoothly in times of crisis.

A SWOT analysis is a highly flexible tool that can be tailored to fit the needs of your small business or startup. Here are some key points to consider when conducting a SWOT analysis for your small business.

Step 1: Put together a broad team 

For your SWOT analysis to be effective, you need to gather a range of viewpoints from across the business. Talking only to customer services or business analytics teams will give you a skewed perspective. Ensure that each major department is represented, from those handling day-to-day operations on the ground to those planning for the future.

Step 2: Listen to ideas 

The team you assemble will be unique, with a distinct mix of perspectives and skills. A good first step is to encourage everyone to share their initial thoughts and ideas. Do this as a group or virtually, but the most important thing is to allow people to share their views in an open, and non-judgmental setting.

Step 3: Create your timeline

When everyone has shared their ideas, it’s time to make some decisions. Those leading the SWOT analysis will want to identify key focus areas, choose a methodology, and decide on a timeline.

Step 4: Create your timeline

A simple grid, with one quadrant each for strengths, weaknesses, opportunities, and threats, is a great way to represent the findings of a SWOT analysis visually. In this form, the insights can be easily shared across the business. 

SWOT analysis template for small businesses

SWOT analysis example: SMB case study

Here’s a SWOT analysis example that small businesses like yours can use to identify your strengths, weaknesses, opportunities, and threats. Let’s look at Clara’s Cake Kitchen, a fictitious bakery.

Strengths

• Location: Suburban location near a train station that draws in foot traffic during rush hour.
• Product: The owner produces high-quality artisanal cakes that customers come back for, again and again.
• Marketing: The owner successfully uses social media channels to generate buzz about the business and has a large following.

Weaknesses

• Unpredictable ROI: Although the bakery is very busy at several points during the day, and on weekends, there are lots of quiet times during the day, and during the summer.
• Limited ecommerce options: The owner hasn’t invested in click-and-collect or online services, as she doesn’t know if it will be worth it in the long run.
• Equipment: Some of the kitchen equipment is second-hand, and is prone to break, requiring expensive repairs and causing order delays.

Opportunities

• Loans and funding: Organizations like the Small Business Administration (SBA) offer funds that could help Clara’s Cake Kitchen expand its business and create more jobs.
• External events: There are some new food festivals and markets starting up in the nearby city. Having a presence at these events could help expand the brand’s reach..

Threats

• Cost of materials: The cost of raw materials that the owner uses to bake the cakes may likely increase. It’s becoming harder to find key ingredients without a long lead time.
• Competition: More local bakeries are offering custom cakes from home kitchens, with lower overhead costs and fewer equipment issues.

SWOT Analysis: Summary

Clara’s Cake Kitchen will need to use its strengths to counter its weaknesses while taking advantage of opportunities and preparing to tackle any threats. Adding online ordering and easy pickup for commuters might be an avenue for the bakery to guard against new competitors and higher costs. Her team could host an event for their customers, offering discounts or freebies. And, together, they can build and grow with a low-cost collaboration tool, like customer relations management (CRM).

What’s next for small businesses?

We’re in a challenging moment where competition is fierce and seizing new opportunities is critical. As per Salesforce’s Small and Medium Business Trends Report, 8 in 10 SMBs are confident about the future of their businesses and believe that they offer unique value and forge stronger customer relationships than their larger competitors do. Conducting a SWOT analysis, and enlisting the right tools for the job, can help your small business address weaknesses, and double down on what has been going well.

Start your journey with the Starter Suite today. Looking for more customization? Explore Pro Suite. Already a Salesforce customer? Activate Foundations and try out Agentforce today.

AI supported the writers and editors who created this article.

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