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SWOT
Analysis for
Startups
Strengths, Weaknesses,
Opportunities, Threats
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Adapted from "S-O-F-T Analysis"
by Blue Rock Capital
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SWOT Analysis is the Key
Component of Strategic
Development.
It can prompt actions and
responses.
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Internal |
External |
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Build on strengths |
Exploit
opportunities |
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Revolve weaknesses |
Avoid threats |
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"SWOT" is an acronym which
represents "Strengths",
"Weaknesses", "Opportunities",
and "Threats". To undertake a
SWOT analysis, ideally, the
first step is to make a long
list of every factor that
defines the company's situation.
If you have a detailed
one-sentence description of
the company, this is a great
place to start. If the company
already has a
business plan, page through
and start "circling" the various
factors that are descriptors of
the company and its situation.
The next move is to triage this long
list in order to sort the entries into legitimate "planning issues" (List A) and
true "problems" (List B).
Take List B and determine which of
the "problems" are likely to "just go away".
Put the issues that are likely "just
to go away" off to the side and focus on List A (true "planning" issues) plus
the balance of list B (problems that are not likely just to go away).
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Then assign the issues to the
specific categories of the SWOT
analysis - which ones are
"Strengths", which ones are
"Weaknesses", which ones are
"Opportunities", and which ones
are "Threats?"
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Note that a company's
"Strengths" and its "Weaknesses"
(its "flaws") are obviously
internal considerations. In
"Strengths", list your company's
internal strengths that make it
competitive in the marketplace.
In "Weaknesses", list any
weaknesses along the
value chain of your venture
that must be strengthened to
ensure success.
Note that a company's "Opportunities"
and "Threats" in a company's operating environment are clearly external
considerations. In "Opportunities", list the opportunities in the market your
venture is going to capitalize on. In "Threats", list the external threats that
your venture must be aware of and the problems that it has to solve.
Equally obvious is the fact that
"Strengths" and "Opportunities" are both
positive considerations. "Weaknesses" and "Threats" are both
negative considerations. To express these
relationships, it can be helpful to think of these factors in a 2 × 2 matrix
(see below)
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In
order to do effective
strategic planning, there
are specific ways that this
information can be used by the
company. In general, it is clear
that the company should attempt
→
to build its Strengths
→
to reverse (or disguise) its
Weaknesses
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to maximize the response to its
Opportunities, and
→
to overcome its Threats.
Using the matrix below, try this
exercise for your company.
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Strengths:
potentially positive
internal factors |
Weaknesses:
potentially negative
internal factors |
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Opportunities:
potentially positive
external factors |
Threats:
potentially negative
external factors |
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