SWOT Your Business Idea
By Stephen Bucaro
SWOT is a mnemonic for Strengths, Weaknesses, Opportunities, and Threats. It's
a method used for analyzing a business idea. To SWOT your business idea, on
paper, draw a box and divide it into four sections. label the sections "Strengths",
"Weaknesses", "Opportunities", and "Threats". Then in each section write down
the related factors that apply to your business idea.
Strengths and weaknesses are internal factors that apply to your business idea.
A strength is a special advantage that your business would have. For example,
would your business have equipment, a method, or expertise that is not commonly
available? A weakness is a disadvantage that your business would have. For example,
would the idea require high development costs or expertise that your company
would need to develop?
Opportunities and threats are external factors that would affect your business.
An opportunity is a new situation that has arisen that your company can take advantage
of. For example, does your idea take advantage of a newly developed technology, a
drop in cost of an existing technology, or an increase in demand for a product
or service? A threat is an external factors that could affect your business in
a negative way. For example, could changes in technology make your business obsolete,
or could a rise in the cost of input materials wipe out any possible profits?
After you've filled in all the sections of your SWOT analysis chart, assign each
factor a relevance value. If you have a good idea, the relevance of the factors
in the strengths and opportunities sections will greatly outweigh the relevance
of the factors in the weaknesses and threats sections. If they don't, maybe you
can devise methods to reduce or eliminate some of the weaknesses.
SWOT should not be the only method you use to analyze a business idea. You should
also do a feasibility study, market analysis, and a competitors analysis. But
a SWOT analysis is an important tool you can use to learn if your business idea
is lends itself to more thorough investigation.