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The Power Of The SWOT Analysis

One of the most powerful tools you can use in planning is called the SWOT Analysis.

SWOT stands for strengths, weaknesses, opportunities, and threats. The tool analyses what strengths and weaknesses your business has, and what opportunities and threats may arise.

But many people use it imperfectly and do not harness the full power of the SWOT Analysis. So, how should you use it during a planning exercise to ensure that its powerful advantages are fully utilised?

Strengths and weaknesses are internal characteristics of your business. They are characteristics that are under your control to influence. For example, having trained staff may be a strength. You can do things that directly affect how well trained your staff are, and you can use that to improve your business.

On the other hand, opportunities and threats are external issues that may impact your business. You have no control over whether they occur but their implications will affect your business. An example is a change in legislation, which could be either an opportunity or a threat. You cannot control the change in legislation but you can either take advantage of any opportunity it represents, or mitigate against the threat it could become.

The key is to analyse what the implications and effects are of each strength, weakness, opportunity, and threat. Too many people simply stop once they have identified their strengths, weaknesses, opportunities, and threats. Instead, you should take the next step and ask “so what?” every time a strength, weakness, opportunity or threat is identified. How will it affect your business, and then, what you need to do to plan for those effects?



The way to use the SWOT Analysis effectively is to pick an aspect of your business, for example, your sales and marketing, or your administration procedures, and conduct a SWOT analysis on that aspect of the business. First, list all the strengths and weaknesses that are characteristics of that as[ect of your business, and then list all the opportunities and threats that may arise and that would affect that aspect of the business if it were to arise.

Once you have analysed all the different aspects of the business in this way, you can also conduct a SWOT Analysis for the business as a whole. Many people start with this but I caution that approach – it’s better to look at the business in smaller aspects so that you don’t get overwhelmed with the bigger picture.

Most people stop here.

I’m not sure why because I don’t understand why they think that simply identifying their strengths, weaknesses, opportunities, and threats actually do anything in identifying any strategies they should implement. You really need to analyse the implications, not merely identify the issues. So, the first thing I would do once you have identified all the issues is to get rid of “noise”. Which of the identified strengths, weaknesses, opportunities, and threats are critical to attaining your vision or your goals? There’s no point in dealing with every single issue if they are not critical!

Once you have shortlisted critical strengths, weaknesses, opportunities, and threats ask how the critical strengths can help in attaining the goals, and how weaknesses can block you from attaining those goals. This will then lead you to consider what you have to do to use those strengths and eliminate the weaknesses, in turn leading to calculated strategies that will help you get to your goals.

As for opportunities and threats, the question to ask is how any opportunity can be taken advantage of, and how any threat should be mitigated. The objective is to “be prepared” in case they do occur. This will show you what strategies you need to put into place in order to be prepared.

If you follow through on identifying the strengths, weaknesses, opportunities, and threats, you will find that the SWOT Analysis is a powerful tool in any planning exercise to lead the way to strategies and action plans.

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