What is a SWOT analysis and do you need one in your business plan?

SWOT Analysis

A SWOT analysis is a tool that business planners use to gauge an organization and its environment. SWOT stands for strengths, weaknesses, opportunities and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors. To perform a SWOT analysis, consider the following:

Strengths:

What advantages do you have? What resources and contacts do you have access to? What recognitions have you received? What are your intangible assets? What do you do well?

Weaknesses:

What do you lack? What can be improved? What are some of the gaps that need to be addressed? What should be avoided?

Opportunities:

What specific opportunities are available to you to take advantage of? What are the opportunities facing your industry that you could possibly pursue? What are the trends that might open new opportunities?

Threats:

What obstacles do you face? What is your competition up to? Are the requirements for your company changing? Are you having any cash flow problems? Can any of these weaknesses seriously threaten the vitality and longevity of your business?

Carrying out a SWOT analysis can be a real eye opener. Not only will it highlight what needs to be "fixed" or immediately addressed, it will also show you what you've been doing right. While it is not a necessity, consider performing one for inclusion in your business plan.

First answer by Crystal. Last edit by Crystal. Contributor trust: 1909 [recommend contributor]. Question popularity: 97 [recommend question]