Breaking Down the 4 Parts of a SWOT Analysis

Estimated read time 3 min read

A SWOT analysis is an important part of a business plan. An acronym for “strengths, weaknesses, opportunities and threats,” it can give your business the upper hand over its competitors. By conducting a SWOT analysis, you’ll have an easier time increasing your business’s market presence and securing new financing. What are the fourth parts of a SWOT analysis exactly?

Breaking Down the 4 Parts of a SWOT Analysis

#1) Strengths

Strengths are positive traits or characteristics of your business that make it stand out. All businesses have strengths. They may include patents, products, reputation, skills and capabilities. Regardless, strengths are positive traits or characteristics that entice customers to choose your business instead of a competitor’s business. When conducting a SWOT analysis, you should ask yourself why customers choose your business.

#2) Weaknesses

Weaknesses, on the other hand, are negative traits or characteristics that may discourage customers from choosing your business. They are essentially areas in which your business needs improvement. No business is perfect. Even Fortune 500 companies have areas in which they can improve. These are weaknesses, and they can cost businesses sales revenue.

Common examples of weaknesses in a SWOT analysis include:

  • High employee turnover rate
  • Low customer retention rate
  • Outdated products
  • Little or no online presence
  • Lack of capital
  • No moat
  • High debt
  • Poor branding
  • Inefficient supply chain

#3) Opportunities

Another essential part of a SWOT analysis is opportunities. Opportunities are things that your business can take advantage of it to increase its sales revenue or chances of success in the future. Opportunities can be internal or external. Internal opportunities occur within your business, whereas external opportunities occur outside of your business. Regardless. both internal and external opportunities are beneficial to your business.

Changes in laws, for instance, may yield external opportunities. If you run a solar panel manufacturing business and a state is planning to offer a new tax credit for solar panel customers, that’s an opportunity for your business. The new tax law will likely have a positive impact on your business’s sales revenue, making it an opportunity.

#4) Threats

You can’t conduct a SWOT analysis without evaluating your business’s threats. Threats are exactly what they sound like: potential dangers or hurdles that can interfere with your business’s operations. They are the opposite of opportunities. Opportunities may benefit your business, whereas threats may hurt your business.

Threats may include new and emerging technologies that trump your business’s own technologies. Alternatively, they may include trends in consumer behaviors.

This article was brought to you by Intrepid Private Capital Group, a Global Financial Services Company. For more information on startup and business funding, or to complete a funding application, please visit our website.

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