SWOT Analysis for Small Business Planning

Business.com / Starting a Business / Last Modified: February 22, 2017

Sometimes it helps not only to think inside the box, but several boxes at once. Learn why you need a SWOT analysis for your small business.

Sometimes it helps not only to think inside the box, but several boxes at once. SWOT analysis (Strength, Weaknesses, Opportunities, and Threats) uses boxes to compare and weigh the strategic influence of internal and external factors that influence the likely success of a business undertaking. They are "four easy steps that even rookie business owners can understand and embrace," according to Bonnie Taylor, vice president of strategic marketing at CCS Innovations.

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A SWOT analysis has four quadrants:



Let's fill in the blanks. Here are some types of considerations that can go into each quadrant:

Evaluating Your SWOT Results

This is not a comprehensive or rigid list of factors that must be considered—what is included entirely depends upon the particular business and what product, service, or venture is being analyzed. These are points for consideration and they are likely to evolve as you consider them. SWOT allows you to visualize potential benefits and risks, and assess:

  • Whether to proceed if projected benefits seem to outweigh the perceived risks
  • Whether to correct the perceived risks in order to gain the projected benefits

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A Sample of SWOT in Action

To see how SWOT analysis works, consider this example:

Soft-Touch makes pads that attach by Velcro to the plastic facemask worn by sleep apnea sufferers to help them breathe during sleep. The company founder herself has sleep apnea, and she developed the product to increase the comfort of wearing the mask and to eliminate the marks it left on her face.

Soft-Touch has largely grown sales through word-of-mouth. A major sleep apnea equipment maker wants Soft-Touch to supply the pads for all of its masks. To satisfy the increased demand, Soft-Touch would have to outsource its manufacturing.

Note that the SWOT analysis doesn't provide an answer, but, rather, it provides a framework to help formulate an answer. Here are a few more examples to get you thinking about how a SWOT analysis can help establish a cornerstone for future strategic planning.

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