Have you already developed a business idea and already know which legal form is the right one? Great! However, that alone is not enough. You should also have a thorough understanding of the strengths and weaknesses of your business. Read here how a well-founded SWOT analysis can help you with strategic planning and your business plan.
What is a swot analysis?
SWOT analysis is a tool that helps you with strategic planning. SWOT stands for "strengths, weaknesses, opportunities, threats" - i.e. strengths, weaknesses, opportunities and risks. Can you assess products, behavior and developments before you even start a company? One can. With the help of a SWOT analysis, which also includes the opportunity-risk analysis, the potential and weaknesses of your business idea can be revealed ( company analysis ) and the external framework conditions that significantly influence the success of your company, your product or your service ( Environment analysis ). Thanks to a SWOT analysis, you can identify the following aspects early on ,
- in which areas your company is particularly strong,
- in which areas it has weaknesses or catching up to do and how the market
- in which you move, looks concrete - ie which positive and negative influencing factors you have to take into account.
From these findings, a detailed positioning can be carried out, an overall strategy can be worked out for the management and individual marketing campaigns can also be derived for the concrete implementation:
- Where are your competitive advantages ?
- Where is the potential for growth ?
- What entrepreneurial risks or dangers are looming that you should be aware of right from the start?
- What areas or niches should you focus on?
- On the other hand, which segments can you neglect?
- Which target group do you want to address? A target group analysis also helps here .
- Which marketing channels are the right ones?
- Where do you want to be in one, two or five years ?
These short explanations alone already show: If you, as a founder, use the SWOT analysis correctly and consistently, then you have a powerful tool at hand and can map the current situation in detail! A good SWOT analysis gives you the basis for stable business planning . And a conscientiously prepared SWOT analysis is also welcomed by investors.
By the way : You should not just create a SWOT analysis once at the time of founding, but rather check it at regular intervals to see whether your assumptions and assessments are still correct or whether you need to revise certain points. You can also compare your old and new SWOT analysis. This is the only way you can react to changes in the market in good time and stay on the road to success with your business.
How does a SWOT analysis work?
In theory, you can basically differentiate between a simple SWOT analysis and the so-called SWOT matrix.
In practice, it is advisable to process both models, i.e. SWOT analysis and SWOT matrix, one after the other. This results in the following procedure:
1. Gather Information
First, research all relevant data and facts related to the environment of your company. They describe the market.
This can be:
- Economic conditions
- Technological Developments
- Legal requirements
- Social and political peculiarities
- Customer requirements
Now take a closer look at your business project. Describe...
- the planned product or service,
- your core competencies,
- your expertise,
- special services,
- Customer relationships (planned or existing),
- Partnerships or cooperations (planned or already existing),
- finance as well
- essential business processes (planned or already existing)
2. Create SWOT Analysis
Start now to sift through the collected information, sort it and start implementing the SWOT analysis.
Where are the strengths? Where are the weaknesses?
Look as objectively as possible where there is potential and deficits in your business model - compared to the competition and your competitors. write everything down
What exactly am I writing? Take a look at your future company and product from the outside:
- What unique selling points do you have? What are you really good at? What is your company likely to do better than the competition?
- In contrast, what do you find difficult? What is your company or product missing compared to the competition?
Important: be honest. Don't sugarcoat obvious weaknesses. On the other hand, don't put your strengths on a pedestal unnecessarily.
What chances are there? And what risks?
From the information collected in step one, you can also derive in which market segments you have the greatest growth opportunities, which trends you should definitely not miss and how you can strategically align your product.
In addition, you can work out whether there are current developments or conditions that could weaken your company. Where are possible dangers? Are there certain competitors that you should particularly keep an eye on? etc.
Important : The more information you have about the market and your competitors, the better you can assess the opportunities and risks and the easier it is to create an opportunity-risk analysis.
Transfer your findings to the simple SWOT analysis scheme. You can download our free PDF template here.
3. Further evaluations using the SWOT matrix
What mistakes should I know about and avoid in SWOT analysis?
A SWOT analysis is a useful model to deal with your business idea, company and product in detail. However, this only applies if you pay attention to a few things.
Goal Setting: Set a clear goal.
A SWOT analysis is a useful model to deal with your business idea, company and product in detail. However, this only applies if you pay attention to a few things.
Gathering information: Gather enough information in advance.
The more data and facts you have collected about your business and the market situation, the better the SWOT analysis will work. Also read the section "How does a SWOT analysis work?" How do I proceed in detail?”.
Diligence: Proceed carefully.
Separate clearly: Don't confuse internal strengths with external opportunities. Keep the overview and the common thread in your hand. These two areas must not be mixed up, but should rather be contrasted. This leads to imprecise and sometimes abstruse results.
Be honest: Try to assess your strengths and weaknesses as realistically as possible. In the end, it won't do you any good if you sweep weaknesses under the carpet and overestimate strengths.
Analyze first, then evaluate.
The SWOT analysis gives you an overview. It describes states, lists conditions. Only after this step can assessment and evaluation take place. And only then are measures and strategies derived. These different characteristics should not be mixed up, it creates chaos.
FAQ: You might also be interested in these questions about the SWOT analysis.
1. When do I use a SWOT analysis?
With a SWOT analysis, you can identify the strengths and weaknesses of the competition and your competitors. Therefore, the SWOT analysis is always useful if you want to take stock of your company or a specific business area.
2. What is the difference between SWOT Analysis and PESTEL Analysis?
The PESTEL analysis focuses on external factors and analyzes their impact on the company. In contrast, the SWOT analysis deals with the perspective of the company on the environment.
3. What are the advantages of SWOT analysis?
In addition to the simple application and the reduced complexity, the SWOT analysis has the advantage of covering many different use cases and offering a comprehensive analysis of internal and external influencing factors. In this way, it promotes transparency and communication within the company.
4. What are the disadvantages of SWOT analysis?
Probably the most common mistake in the SWOT analysis is the subjective evaluation. In addition, the results are dependent on the specified factors. This means that if the factors are chosen incorrectly, incorrect statements will be made. In addition, the SWOT analysis entails a great deal of research.