When starting a professional activity or creating an online company , one of the fundamental questions is to carry out an exhaustive SWOT analysis.
Your self-employed and SME consultancy or agency will take care of this , but it is important that you know exactly what this term means. And that is precisely what we explain to you in the next few lines. Take note if you plan to start a new business!
The importance of the SWOT Analysis or Matrix
The term SWOT corresponds, in reality, to an acronym: Weaknesses, Threats, Strengths and Opportunities. For this reason, you will also see it sometimes written as a SWOT, depending on the order given to each letter. And they can be grouped into two categories:
- Internal factors.
- External factors.
These four aspects will mark the success or failure of your business, so you must exploit some and avoid or minimize others. Let’s review them one by one.
Internal factors: Weaknesses and Strengths
The internal factors of the SWOT analysis have to do with elements that only depend on your company:
In the case of weaknesses, you will not be able to blame anyone for them, but knowing and recognizing them will lead you to keep them at bay, to prevent them from distorting the activity and, ultimately, to overcome them.
Examples of this may be the lack of experience or time flexibility, physical injuries in the case of the self-employed or the existence of high fixed costs.
In the case of strengths, the opposite happens: you must exploit them because they are a differentiating element with respect to the competition. They can be, for example, a great geographical location, a strategic alliance in production or a good customer base.
External factors: Threats and Opportunities
External factors do not depend on you, because you have neither responsibility nor influence over them. But you must also know them to know how to adapt your operations to them and minimize damage or maximize benefits:
To combat threats, crisis plans are made. Examples of them are terrorist attacks, epidemics or sudden disruptions in the supply chain.
On the contrary, opportunities are favorable situations in the market that not all businesses know how to observe. Therefore, having intelligence and intuition will lead you to take advantage of all of them.
Examples of these positive external factors are the difficulties of competing companies, the emergence of a specific need in the market or the population increase in a certain area, such as the delivery of keys in a newly built residential neighborhood.
Conclusions on the SWOT
For all these reasons, we recommend that you prepare a SWOT analysis (or SWOT matrix) as exhaustive as possible and, once prepared, always keep it in mind in order to react quickly to any of the situations described above.
If you keep the risks derived from Weaknesses and Threats at acceptable levels, and are always ready to take advantage of Strengths and Opportunities, your business will surely be a success.