How to Do a SWOT Analysis for a Business Plan?

Writing a business plan is a complex, time-consuming process that requires a lot of research. 

Proper research acts as a solid foundation for your business plan. It helps you better understand your market, target audience, and competitors.

One of the more valuable research techniques you should use is a SWOT analysis. 

A SWOT analysis helps you understand your business's position in the market. The term stands for strengths, weaknesses, opportunities, and threats.

This research technique is key in the business planning process. You can use it to craft an effective business strategy for current and future success.

If you want to know how to do a SWOT analysis for a business plan, keep reading. 

What Is a SWOT Analysis and Why Is It Important?

A SWOT analysis is a strategic planning tool used to identify and assess a business's strong and weak points.

It also includes spotting external opportunities and challenges that could influence the business.

SWOT stands for:

1. Strengths – What the business does well and what gives it an advantage
2. Weaknesses – The areas where the business needs to improve
3. Opportunities – External factors that could help the business grow or succeed
4. Threats – External challenges that could harm the business or limit growth

A SWOT analysis is often used when starting a new business. It's also a common tool used when launching a new product. 

It provides a clear overview of both the positive and negative factors that could impact success. 

A SWOT analysis is a key element of every business plan.

The purpose of this type of analysis is to uncover insights that can help you make strategic decisions.

You will be able to gain a clearer understanding of the industry in which your business operates.

It can also help you create strong strategies to stay competitive.

A SWOT analysis is also valuable because it offers a clear picture of where a business stands. It also looks at what factors could affect its success. 

To sum it up, a SWOT analysis helps business owners:

• Identify what they're doing well and where they can improve.
• Spot opportunities for growth and innovation.
• Prepare for potential challenges and minimise risks.
• Make informed decisions based on a balanced assessment of internal and external factors.

How to Write a SWOT Analysis in a Business Plan?

Conducting a SWOT analysis is a complex process. It involves more than simply listing strengths, weaknesses, opportunities, and threats. 

It requires careful research, critical evaluation, and thoughtful planning. 

If done properly, it can provide key insights that can improve your business strategy.

Doing a SWOT analysis for your business plan involves three crucial steps:

1. Research
2. Analysis
3. Implementation

Research

An accurate and useful SWOT analysis is based on research.

Without proper research, your evaluation may be based on assumptions. This can lead to poor decision-making. 

Doing research provides factual data for an accurate SWOT analysis. It can help you discover new opportunities and hidden threats.

Here are some tips on how to do research for your SWOT analysis:

1. Study your market

It's important to understand your industry, competitors, and target audience. Make sure to analyse market trends and customer demands.

2. Review your business operations

The next step is to examine your processes, resources, and performance. Doing this will help you figure out what works well and where there are gaps.

3. Analyse competitors

Look at the strengths and weaknesses of your competitors. Understanding what makes them successful and where they struggle is key. 

4. Engage with customers

It's always a good idea to gather feedback. You can do this through surveys, reviews, or interviews. It will help you learn what customers value about your business and where they see room for improvement.

5. Assess financial data

Finally, assess your revenue, costs, and profit margins. Doing this will help you understand your financial health.

Analysis

Once you have collected the necessary information, the next step is to analyse it.

You can then categorise your findings into the four sections of the SWOT framework.

For strengths and weaknesses, look at internal factors. For opportunities and threats, analyse the external factors that may affect your business. 

Identifying Strengths

Your strengths are basically your competitive advantages. These could be any positive attributes that put you ahead of your competition. 

If you're not sure how to identify your competitive advantages, ask yourself:

1. What are you good at?
2. What unique resources do you have?
3. What do customers appreciate about your business?
4. Do you offer better quality than others in your market?

Start by celebrating what you do well. Identify the core advantages that set your business apart.

These may include:

• Unique products or services
• Strong brand reputation
• Skilled and experienced team
• Advanced technology or equipment
• Loyal customer base
• Financial stability

If you need some help, you can also review customer feedback. What do customers frequently praise?

You can also consult your team. Involve employees and partners to gain different perspectives.

Identifying Weaknesses

This next phase may be slightly more challenging because you have to look at what your business is bad at.

Your business's weaknesses are the internal factors that limit your success or put you at a disadvantage compared to others.

It's important to be honest with yourself. It's the only way to figure out what parts of your business need to be improved.

Ask yourself:

1. What resources are lacking?
2. Where do competitors outperform you?
3. What internal challenges slow down your progress?
4. Are there recurring complaints in online reviews or surveys?

These internal limitations could prevent your business from achieving its goals.

Potential weaknesses may include:

• Lack of funding or resources
• Inefficient processes
• Poor marketing strategies
• Gaps in expertise or staff shortages
• Limited customer reach
• Outdated technology

Identifying Opportunities

Now, it's time to look at the external factors you can use to your advantage.

Analyse the external chances for growth, also known as business opportunities.

This step will be easier once you have analysed your weaknesses. To identify your opportunities, look for areas where your business could grow or improve.

Ask yourself these questions:

1. Are there emerging trends you can capitalise on?
2. Is there an unmet customer need you can address?
3. Are there new markets or customer segments to explore?

Identifying these potential areas for growth can help you expand your market and improve your services. It can even result in increased profits.

Opportunities might arise from:

• Growing market demand
• Emerging industry trends
• New technology developments
• Weak competition in certain areas
• Changes in customer preferences
• Changes in regulations and policies

Identifying Threats

The last step is to identify threats that could hinder your progress. 

Threats are external factors that could harm your business, slow growth, or reduce profits. This could be anything from disruptive competitors to economic shifts.

You may ask yourself:

1. Are there new competitors entering your market?
2. Could changes in the economy affect your business?
3. Are there legal or regulatory changes that may impact you?

Recognising threats early helps you prepare for risks and protect your business. 

It helps you be proactive.

Some examples of threats to your business include:

• Increasing competition
• Economic downturns
• Changing regulations or legal requirements
• Rising costs of raw materials
• Shifts in consumer behaviour

Implementation

You've successfully gathered insights from your SWOT analysis. The next step is to turn those findings into a clear plan of action. 

This stage involves two important parts: 

1. Creating a SWOT matrix 
2. Developing strategic actions

These steps help you organise your analysis. You'll also be able to decide how to use the information to drive your business forward.

Creating a SWOT Matrix

A SWOT matrix is a simple visual tool that helps you organise your SWOT analysis into a clear, easy-to-understand format. 

It divides the information into four categories: strengths, weaknesses, opportunities, and threats.

Once you fill in the matrix, it becomes easier to spot patterns and create focused strategies.

Other benefits of the SWOT matrix include:

• It provides a clear visual summary of your business's situation.
• It helps identify strategic actions quickly.
• It highlights how internal strengths can be used to manage external challenges.
• It simplifies decision-making and planning.

You can also organise your SWOT analysis like this:

This SWOT matrix was taken from our business plan template, which you can download for free. 

Developing Strategic Actions

After creating a SWOT matrix, the next and final step is to turn your observations into specific strategies. 

This is where your SWOT analysis becomes a tool for real business growth. 

The best way to develop a strategy is by analysing the relationships between factors.

Here are the most common strategies:

1. Strengths + Opportunities (S-O Strategy):

In this strategy, you'll use your strengths to seize opportunities. This approach focuses on using what your business already does well to take advantage of external opportunities.

Example: 

If you have a skilled marketing team (strength) and there's growing demand for your product (opportunity), you can launch a new marketing campaign.

2. Strengths + Threats (S-T Strategy):

This strategy involves using your strengths to minimise the impact of external threats. The goal is to protect your business by relying on your competitive advantages.

Example: 

If you have a strong brand (strength) and new competitors are entering the market (threat), you can strengthen customer loyalty with special promotions.

3. Weaknesses + Opportunities (W-O Strategy):

This approach involves identifying internal weaknesses that may be holding you back from taking advantage of external opportunities. You should work on improving these weaknesses to unlock growth.

Example:

If there's demand for online sales (opportunity) but your website is outdated (weakness), investing in a new website can help you grow.

4. Weaknesses + Threats (W-T Strategy):

This is the most defensive strategy. It focuses on minimising internal weaknesses to protect the business from external threats. This approach helps prevent weaknesses from being exploited by competitors or market shifts.

Example: 

If your supply chain is unreliable (weakness) and raw material costs are rising (threat), you might seek more reliable suppliers.

The Value of SWOT Analysis in Business Planning

Conducting a SWOT analysis is a key step when developing a business plan. 

It provides a clear, structured way to understand your business's strengths, weaknesses, opportunities, and threats.

A well-executed SWOT analysis doesn't only strengthen your business plan. It also gives you the confidence to face challenges and achieve long-term growth. 

As part of our business plan services, Launch Crew conducts market research and SWOT analysis. 

We understand how the market works and just how much it can affect your business. 

If you sign up for our business plan services, we'll do a SWOT analysis as part of the service package. 

We can also help you understand why a SWOT analysis is so important for the success of your business.

Reach out to us if you want to know more. 

{{cta}}