What is a SWOT analysis?
A SWOT analysis — which stands for strengths, weaknesses, opportunities and threats — is a simple and powerful tool for strategic business planning. Strengths and weaknesses are considered internal factors because you have more control over them, while opportunities and threats are considered external factors that you can prepare for but can't control.
When using this SWOT analysis tool, it can be helpful to focus on a specific question or objective. It's best to complete your SWOT analysis as a team exercise with stakeholders who can contribute data and perspectives from across your business.
View a SWOT analysis example on the Knowledge Center.
Your strengths are the things your business already excels at. Identifying your strengths can help you find more efficient ways to problem solve or potential directions for growth. Use data to back up your strengths when possible.
Examples: Best-selling products, strong brand recognition, great cash position
A weakness is any area in which your business is underperforming. Identifying your weaknesses is the first step toward correcting them — and you may even find that your weaknesses are also some of your biggest opportunities for growth.
Examples: Production bottlenecks, negative feedback, technology or equipment limitations
These are external factors that your business is positioned to capitalize on. They could result from your own analysis of your strengths and weaknesses, your competitors shortcomings or broad economic forces like changes in tariffs or interest rates.
Examples: Gaps in the market, shifts in your customer base, promising new relationships
Threats are external factors that could potentially diminish or disrupt your business performance. Threats can be tricky to address because they're out of your direct control, but identifying them early can help you minimize damage and adapt.
Examples: A tight labor market, high inflation, natural disasters
Once you've filled out your SWOT matrix, analyze your findings and decide what's most important to your business success. Come up with action items and delegate tasks to help everyone on your team move forward with clarity. Consider applying your results to the following questions:
- How will your business model need to evolve to remain competitive?
- Which opportunities and threats are most urgent?
- What resources will you draw on if faced with a setback?