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How Do I Conduct a SWOT Analysis for a Small Business?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 07 November 2016
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Conducting a SWOT analysis for a small business involves an analysis of the strengths, weaknesses, opportunities and threats that apply to the business. The Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis is a good template with which to build the small business because it will give the proprietor an accurate idea of the exact situation of the business. Identifying strengths and weaknesses might include both internal and external factors.

The identification of strengths in relation to conducting such a SWOT analysis involves the analysis of those aspects that make a business stronger. An example of strengths might be reduced overhead expenses as a result of cheap labor, cheap raw material, tax breaks or tax credits, and other factors. Other characteristics that might contribute to the strengths of the small business include the ability to make fast business decisions, unlike big companies that have to go through several clearances.

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The weaknesses in relation to the SWOT analysis for a small business include all of those factors that make the business vulnerable. Such things may include the fact that the small business does not have enough finances to function effectively. The small business might also have a shortage of employees, which may be due to the lack of finances to pay their wages. Since most small businesses are typically run by a sole proprietor, most of the decisions made regarding the business may be limited to what the proprietor knows about it. If the proprietor fails to hire business analysts or other types of business professionals to properly guide the organization, the proprietor may make some costly mistakes as a result of limited knowledge or experience.

Opportunities in relation to SWOT analysis for a small business include both internal and external factors that may affect the business. An example of opportunities is the identification of a need that can be quickly filled by the services of a small business. For instance, someone may identify the need for a small pastry shop right next to a coffee shop located near a business district with many offices and shopping malls. This is an opportunity on which the small business owner can capitalize. The threats in a SWOT analysis for a small business include factors like adverse regulations and policies, stronger competitors, and a failure to adapt to emergent technology. Threats are those factors that endanger the very existence of the small business, and ignorance or failure to decisively address such things could mean the difference between the continued existence of the business and failure.

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