How to do a SWOT analysis for strategic planning?
SWOT analysis is a foundational pillar of any business. From getting started with an idea through closing your exit, you’ll be using some form of SWOT at almost every turn. It’s expected, and done right is very valuable.
How can you use it to aid in strategic planning that will improve everything else you do in your business?
What Is A SWOT Analysis
A SWOT analysis lays out for critical parts of any business. These are:
This is typically laid out in a quad shaped graphic. Just three to four bullet points in each section, with a sentence for each point, is sufficient.
It is like a comparative analysis of your competition. Though your findings are focused on your businesses in relation to the overall market.
In some scenarios, you may also want to layout a graph that compares your company to other major competitors.
Applications For SWOT Analysis
When it comes down to how to do a SWOT analysis for strategic planning, there are various purposes and uses for a SWOT analysis.
1) Business Planning
SWOT is a major component of business planning. Before you even really leap with a business idea, you will want to use this method to validate your idea, it’s potential, and to hone the details of your business plan. Below is a video where I cover in detail how to write a business plan.
2) Pitch Decks
SWOT is a big part of your pitch deck when it comes to startup fundraising. You may also be using decks like this when thinking about selling your company and negotiating the best M&A deals.
Remember that storytelling plays a key role in fundraising and you will need capital to scale things up. This is being able to capture the essence of the business in 15 to 20 slides. For a winning deck, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
3) Strategic Planning
This type of analysis is very powerful when applied to strategic planning. Whether honing your initial pricing and markets to focus on, deciding where to dedicate resources, the best elements for your new website, or plotting an expansion or path to an exit, these findings will point you in the right direction.
Preparing For Your SWOT
There are three key parts before you figure out how to do a SWOT analysis for strategic planning.
Have Your Data Ready
Have as much data as possible available and ready in a data room. Have guest logins to any analytics tools you use for anyone who might help with your SWOT diagram, pitch deck design, and strategic planning.
Fresh Market Analysis
For your SWOT to be accurate, you need the most up to date information. This is a good time to conduct fresh market research, and compile it for all your needs.
Decide Who Will Complete It
As an entrepreneur and founder, you may have the best understanding of your business and your goals. You may also be the least experienced at this. Even if you have an MBA and have practiced or done it before, you can be far too close to get the best answers. It may be far more effective for an outside strategic consultant with no bias to perform this with a fresh set of eyes.
The next part when trying to figure out how to do a SWOT analysis for strategic planning is to understand what strengths give you an advantage over any current and future competition.
These are some of those you may want to include.
What resources do you have that give you an advantage in the marketplace? Perhaps it is financial? Do you have large amounts of cash or new rounds of funding in the bank? Do you have the most talented team? Prime real estate? Proprietary technology, trademarks and patents or licenses, website domain names?
Companies have been bought for many millions just based on the strength of their brand. It can be young and hip and popular, or well trusted or just luxury and capable of justifying a premium.
Do you have a long track record in this space? Or are you a brand new player in an industry that is rotten with just a few big and disliked incumbents? Both can be an advantage.
Can you operate faster than the competition? Do you have distribution and marketing channels that separate you from the competition? Can you sustainably operate more profitably and at a cheaper price point?
Be honest and real. Only then can you de-risk your business, and really identify where you excel. If you aren’t transparent here, you can expect investors and others to call you out during pitches too.
Are you running on a lean startup budget? Do you have a very small team? Do you have limited experience? Are you relying on other people’s technology?
Do competitors have vertically integrated businesses that can give them an advantage? Can others afford to lose billions just to put you out of business? Are your customer acquisition costs high? Do you face long periods of waiting to scale to get profitable or close first sales?
When thinking about how to do a SWOT analysis for strategic planning, remember to ask yourself what new opportunities or changes make this the perfect timing for your business? Where are there gaps that you can exploit?
Some categories here may include:
- Market and consumer trends and shifts
- Changes in embracing new technology
- Entirely new spaces and industries being created
- Government regulations opening-up
- New unique partnerships
Acknowledge current and future threats. It is the only way to be alert enough to protect yourself.
Questions to ask yourself here include:
- Do we have enough capital reserves to weather a depression or natural disaster?
- Is there potential demographic changes that could impact your business?
- Could regulations and the political environment change?
Turning Your SWOT Into Strategic Planning
Don’t just do your SWOT analysis to satisfy others or fill in the blanks. Use it as an active part of your strategic planning. Provide this graphic and findings to your teams, outside consultants, marketers, and others. Use it to know where to focus your strengths, and where you need to beef up your defenses and protect your future.
Hope this provided some guidance when discovering how to do a SWOT analysis for strategic planning.