If you want your startup to succeed, knowing everything about the environment in which it is located as well as its circumstances is a requirement you can’t skip. It is essential that you know the market in which your company operates, your competition and the situation from which your business starts. This will allow the strategies you follow to work and be correctly focused. To perform this step, there is a process that every entrepreneur usually, and should, resort to: the SWOT analysis.
What is SWOT analysis?
SWOT stands for Strengths, Weaknesses, Opportunities and Threats, the four areas of your company that you should analyze in detail in order to make decisions that will help you achieve your goals. These areas are divided into two, depending on if they refer to internal or external factors.
Within the analysis of internal aspects, we find the weaknesses and strengths. The first of these areas includes the aspects in which your company should improve, whether because it needs to provide more resources, a better organization, more training, etc. Here you must detect everything in which your competition can surpass you in order to find a solution. While in the strengths you should include everything your company does well, your strengths and competitive advantage. In other words, think about what it is about your business that makes it stand out in the market and what you can take advantage of.
On the other hand, in the external analysis are the threats, that is, obstacles or circumstances that may negatively affect your business development and that are beyond your control, since they can be related to the political situation, the economy, etc. And, finally, we find the opportunities, that is, situations that occur in your environment and that you can take advantage of strategically, thus favoring your company, for example, new technological trends, Government aid, legislative changes, etc.
What is a SWOT for and when to do it?
The SWOT analysis is very useful when starting a company, since it allows you to have comprehensive view of the state of your business and its strengths and weaknesses, in order to make effective decisions, such as which strategy is more appropriate depending on your situation
Although it is generally recommended to do it on the first steps of a company, it is also indicated for when conditions, whether internal or external, change. On the other hand, it is very useful to establish a frequency with which to perform a SWOT analysis, for example, quarterly or semi-annually, as a form of self- assessment and a basis for planning. In addition, performing a regular SWOT analysis allows you to prevent and cope with the adversities without being surprised, to identify changes in your environment and to adjust your strategies.
As you have seen, the SWOT is a very useful tool and very easy to use, moreover, this is not only functional for your professional life, but it is also used in the personal sphere because of the help it offers to make decisions. Now that you know this, we recommend you to start using this analysis in your startup, as well as other resources and tools that La Lonja de la Innovación teaches you how to use.