Ishaaron Ishaaron Mein

The business world is growing quite rapidly. This is attributed to a large number of people opting to involve themselves with entrepreneurial activities. The first step is considered the hardest when starting a business. This is because you have to figure out the route that your business should take to attain the set goals. After this step, the rest of the things will fall into place.
However, this does not mean that things will be smooth after the first step. You will meet obstacles, challenges, and setbacks along the way. How you handle them will determine the survival of the business or organization. SWOT analysis has been a useful tool that has helped both the startup and existing businesses to overcome some of these challenges.
Understanding the SWOT analysis
When a business is starting up, or an already existing business/organization is faced with some challenges, it will need to go through a validation process. SWOT analysis is one effective way that can be used here. It will help identify actions required to be undertaken for the business/organization to thrive. SWOT framework was designed to help business and industries.
SWOT analysis is a technique used to evaluate the competitiveness of a business startup. Note that SWOT analysis is an analytical tool and not an actual strategic process. It mainly focuses on the internal and external factors that affect the operation of the business. SWOT is an acronym that represents:
Strength and Weakness are considered as internal factors, while Opportunity and Threat are considered external factors. Below is a detailed summary of the components of SWOT analysis.
I. Strengths
Strengths are the attributes that are considered as an added advantage to the running of the business. The strength of the business will be measured on the resources and capabilities that will give it a competitive advantage over the others. Examples of such are:
• Unique technology
• Large customer base
• A strong brand, etc.
II. Weaknesses
Weaknesses are the attributes that may hinder the business from attaining its goals. They mostly affect new businesses that are still growing. However, this does not mean that existing businesses are not affected. Examples of weaknesses are:
• Lack of capital
• Lack of technology
• Inadequate raw materials
III. Opportunities
These are external factors that are considered favorable to business success. The business, therefore, considers these factors helpful in realizing its goals. Examples of opportunities are:
• Desirable market conditions
• Large customer base
• Good reputation
IV. Threats
These are external factors seen as a stumbling block towards business success. The business will have no control over these factors; thus will require the business to devise mechanisms that will see you overcome such threat. Examples of threats are:
• Negative public perception
• Lack of vendors
• Substitute products
Importance of SWOT to the business
The process of SWOT analysis has two main importance to startup and existing business/organization
i. Reducing risk
With SWOT analysis, you will be able to look at the threats and weaknesses that your business will probably face. Through this analysis, you can decide what element you need to deal with first. Whether it’s the external threat or the internal Weakness facing the business/organization.
To deal with internal weaknesses, a business/organization can choose to fix the problem by deciding to increase business resources. To deal with the external threat, the business/organization can choose to abandon the threatened product/area or face the threat after it’s strengthened.
ii. Improve performance
SWOT analysis, secondly helps the business to understand the actions needed to improve business performance. It does this by pairing the strengths and opportunities that the business has. As an entrepreneur/organization, you will need to take advantage of the opportunities by using the strength attributes of the business.
Example. If the business strength is finance, the finance can be used to invest in the latest technologies or, buy off the weaker competitor to eliminate competition. This will help to see your business succeeding and achieving its goals without much problem.
When to use SWOT analysis
This method can be used at any stage of business growth. SWOT analysis used to
• Explore solutions to a problem facing the business or effort.
• When important business decisions are needed to determine the right path, the business should take.
• Determine the area that needs change.
• Adjusting and refining plan mid-course. Some new opportunities may arise along the way that may require the business to do the validation.
Advantages of SWOT analysis
i. Simplicity
The SWOT analysis framework is quite easy and does not require any specialized training or technical skill to conduct it. The good news is that SWOT analysis can be performed with anybody or a team that has the right amount of knowledge on what is to be analyzed. This means that it’s not expensive and takes the shortest time to complete, thus no need to hire an external consultant.
ii. Factor identification
The SWOT analysis main purpose is to help the entrepreneur or members of the organization familiarize with both the internal and external factors affecting the business. These factors may be favorable or unfavorable to the running of the business. This information will equip the entrepreneur/organization with the right knowledge and information to move forward.
iii. Wide application
A SWOT analysis can be used across various types of organizational requirements. E.g., apart from providing the business with an overview of the internal and external situation. It can also be used to analyze a particular function in the business or department, brand, market strategy, target market, etc.
The first step undertaken when starting a business always dictate the journey it will follow. The key advantage of a SWOT framework is its ability to link the internal strength and Weakness of a business/organization to the external threat and opportunities.
Any business will, at one point, need to conduct a SWOT analysis. New businesses are encouraged to do this before they can fully venture into the business world to avoid closure when still in operation. Also, the success of your business/organization will depend on the effort and sacrifices put to see the goals achieved.