How to do a SWOT analysis in 5 steps

How do you do a SWOT analysis?

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. In a SWOT analysis you compare the internal strengths and weaknesses of your company against opportunities and threats from outside. It is part of your market research and helps you plan for the future. You make a SWOT analysis in 5 steps.

1. Internal analysis

Start by naming the strengths and weaknesses of your company. Describe as honestly as you can what you do well and what you can do better compared to your competitors.

Look objectively at past results, your personnel, your product or service, your customers, your finances, and your marketing. Let other people contribute their ideas, such as a partner, mentor, or employee(s).

In this article, we share examples for 2 situations. Business to consumer (B2C), when you supply private individuals as users. And business to business (B2B), when you deliver to businesses.

Example 1: online sustainable clothing shop (B2C)

• Strengths: Loyal Instagram followers, unique sustainable fabrics, enthusiastic and creative team.
• Weaknesses: Little experience with online advertising, limited stock, no established suppliers yet.

Example 2: freelance marketing agency (B2B)

• Strengths: Specialist knowledge of AI marketing tools, flexible provision of services.
• Weaknesses: No large customer base yet, no developed templates for price quotations and contracts.

2. External analysis

Next, determine what opportunities and threats there are outside your business. Think of external factors such as new laws and regulations, developments in the market, in your sector, in your competition, and changes in customer behaviour, technology and politics. KVK’s  Dutch-language Location scan tool can help you do this. 

Example online clothing shop (continued)

• Opportunities: Growing demand for sustainable fashion, influencers want to collaborate, many local markets and pop-up stores available.
• Threats: Rising raw material prices, online competitors with faster delivery times, stricter rules for returns.

Example marketing agency (continued)

• Opportunities: Businesses want to use AI but have little knowledge, new online networking events.
• Threats: Large marketing agencies offer cheap standard packages, rapid changes in AI tools mean knowledge goes out of date quickly.

3. SWOT table

Now put all the strengths and weaknesses from both the internal and the external analysis in a table.

SWOT table example online sustainable clothing shop (B2C)
 

SWOT table example online sustainable clothing shop (B2C)

Tips for making a SWOT analysis

1. Make the SWOT analysis with a team from different disciplines. Also involve outsiders to avoid tunnel vision.
2. Name a maximum of 3 strengths, weaknesses, opportunities and threats. Choose the points that are most important or most distinctive to your customers.
3. Formulate the points as concretely as possible. For example, instead of 'retrain staff' say 'retrain staff in digital marketing and online security'.

4. Confrontation Matrix

Next, make a confrontation matrix. To do this, you make a table with the strengths and weaknesses. Then for each one, you assess the opportunities and threats. Do this with pluses and minuses: from very promising (++), neutral (0) to very threatening (--).Then calculate the total score, so that the most important relationships emerge. 

 

5. Determine conclusion and strategy

A SWOT analysis helps you determine your strategy – your plan of action. Take note of the most striking relationships from the confrontation matrix. Then think about what you can do with this information to help your business grow. Here are examples of 4 directions you can choose to take:

• Grow: Exploit strengths and opportunities. The clothing shop launches limited editions via Instagram with the help of influencers.
• Defend: Use strengths to resist threats. The marketing agency builds a network of other freelancers to secure new, larger assignments without increasing its own fixed costs.
• Improve: Update weaknesses to exploit opportunities. The clothing shop finds sustainable suppliers to solve inventory problems.
• Withdraw: Let go of activities that reinforce weaknesses and threats. The marketing agency lets go of standard, “price-fighter” services (e.g. simple social posts) and focuses entirely on larger, key AI marketing projects.

Business Model Canvas for more insights

Do you want to explore in even more detail how to take your business in the right direction? Then complete the Business Model Canvas, its 9 steps will help you respond quickly and effectively to change.