How To Run A SWOT Analysis For Your Online Business
If you are a Marketing or Business Graduate, you must be familiar with the term SWOT analysis. This simple and powerful tool is extremely helpful to arrive at crucial strategies be it business, marketing, sales or communication.
Performing a SWOT analysis is an effective choice for online businesses that are looking to establish a foothold in the market or looking to create a market for their product.
What is SWOT Analysis?
SWOT is an abbreviation for Strengths, Weaknesses, Opportunities, and Threats.
To arrive at your online business’s strengths and weaknesses you need to look within the company. Your strengths and weaknesses are something you have some control over and can potentially change.
Opportunities and threats, on the other hand, are external and require you to look at things that are going on in the market.
You cannot change these external factors, but you can take advantage or cognizance of them to change the inner workings of your online business.
SWOT analysis for your online business involves a careful assessment of the strengths and weaknesses of your business, against the opportunities and threats provided by the market and other external factors.
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Who should do a SWOT Analysis?
SWOT analysis is not something that can or should be delegated to interns or management trainees.
For SWOT analysis to be effective, founders and leaders of the online business need to be deeply involved.
Having said that, this is not an activity that should be conducted in closed chambers with only the top management partaking in.
Effective results will be arrived at once you involve a group of people across various stages of experience across different departments, who can offer different perspectives on your online business.
Some companies go so far as to take inputs from customers and business partners as part of their process to arrive at a SWOT analysis of their business.
In case you are launching or running an online business on your own, you can and should still do a SWOT analysis.
You can ask for additional points of view from friends who are aware of your business and business associates, clients, vendors who you trust or look up to.
Existing online businesses can use SWOT analysis to assess their current strategy and situations and determine a more effective way forward.
Factors you consider to arrive at a SWOT analysis will constantly keep changing, which makes it important for you to reassess your strategy every 6 to 12 months.
What is the right way to conduct a SWOT analysis?
As specified earlier, the first step to arriving at a SWOT analysis for your online business is to gather a team of people with varying perspectives and experiences in the industry or within your organization.
It is as good as a brainstorming session and you can gather responses in more ways than one.
You can go section by section on the SWOT matrix, starting with strengths and then weaknesses asking pertinent questions and putting all responses on a whiteboard which can eventually be shortlisted to a smaller list of most applicable ones.
Alternately, everyone can jot down their responses on a piece of paper which can collectively be analyzed for the most common responses and those can be considered as being the final pointers under each section.
Once all the responses are gathered, everyone present can vote and arrive at the most relevant ideas.
Points that are up for debate can be settled by the CEO or the person in charge of business strategy, and in the case of self-run businesses, it would be you.
Questions that can help arrive at SWOT Analysis
Strengths – Internal positive attributes that are within your control
- What processes in your online business are currently successful or have been successful in the past?
- What are the assets in your online business? (Assets here may not be limited to their monetary value and can mean to include your team’s skills, knowledge, and expertise)
- What are the physical assets that your online business has? (Example could be customers, equipment, technology, etc)
- What competitive advantages do you have over competition or existing businesses in your category?
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Weaknesses – Negative factors detracting your business from its strengths; elements you need to improve upon to be successful
- What are the current processes in your online business that need improvement?
- Are there any existing gaps on your team?
- Do you have enough information/ understanding of your target audience?
- Do you have enough capital or is there any potential expense that your company needs to make?
- Are you catering to the right market/ is the market you are catering to a growing market?
Opportunities – External factors in your business environment; likely to contribute to your business’s success
- Any trends in the current market that are likely to show positive results for your business?
- Are there any upcoming events/ festivals that your online business can take advantage of to grow?
- Are there favorable changes to government regulations that might impact your company positively?
- Do you have repeat/loyal customers?
- Do your customers think of you positively?
Threats – External factors that you have no control over; may need contingency plans for dealing with them
- Who are the potential competitors who may enter the market?
- Will your vendors/ suppliers always be able to supply the material you need at the prices you are comfortable with?
- Are there any potential changes/ developments in technology that can hamper your online business?
- Is the behavior of online consumers changing in a way that could impact your business negatively?
- Are there market trends/ government regulations that could become a threat to your online business?
Once your SWOT analysis is complete, you can make use of it to convert it into a well-formed and real business strategy.
The first step is to look at strengths and use them to take advantage of your opportunities.
Second is to look at your weaknesses and look at converting them into strengths or at least to minimize the threats.
Next, look at how the strengths of your online business can combat the threats, and arrive at action points basis all of these.
Once your action list is ready, use it to arrive at strategic goals.