What is SWOT analysis? How is it used in startups? What are the parts of this type of business analysis you’ll need to pull together?
A SWOT analysis is one of the most fundamental parts of a business. It has many applications throughout your journey and operations. This is true even if you don’t plan to go seek outside funding from VC firms yet.
Nailing this research and diagram can make a huge difference in your survival, traction, and how big you get. So, what is it? How do you present and prepare one? What do you need to include?
The Ultimate Guide To Pitch Decks
What Is SWOT Analysis?
S.W.O.T. stands for:
This analysis is used to identify and evaluate the strengths and weaknesses of your business, its opportunities, and threats to it.
A SWOT analysis can have both internal and external applications. You shouldn’t be in business without one. You probably won’t be for very long without performing one.
Keep in mind that in fundraising, storytelling is everything. In this regard for a winning pitch deck to help you here, 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.
The Importance Of SWOT Analysis For Your Startup Business
There are a variety of reasons you can’t afford to skip the SWOT.
Vetting Your Startup Idea
SWOT analysis is critical in forming, honing, and vetting your initial business idea. There is little as sad as to see an inspired entrepreneur rush to start a business, set everything up, reserve domain names, start making hires, invest in creating a brand identity, and then discover a basic foundational flaw that wastes it all. Your SWOT is your tool to prevent this.
From your first business plan draft SWOT is a staple. It drives most of the rest of your planning. This is especially true of marketing plans, as well as strategic planning for every move you make over the years. It’s expected to be there, and it is vital for your own use.
Credibility With Advisors & Team Members
If you hope to recruit great advisors, cofounders, partners, and team members you have to be credible. You aren’t going to have much credibility if you haven’t performed a SWOT.
Your SWOT is one of the key pieces of data potential investors are going to want to see and one of the critical things you need to figure out when wondering how to raise a seed round. This is your chance to show you really know what you are doing, have done your homework, and have a solid plan that reflects this analysis.
Presenting A SWOT Analysis
Whether it is for your own business plan, personal reference, sharing with your own team, or for those outside of your company in a pitch deck format, a SWOT analysis is typically formatted as a square-shaped grid with four sections. The data may also be shown as a graph comparing your company to your competitors.
Steps To Creating A SWOT Analysis
Who will complete your SWOT? You could do it yourself as a solo entrepreneur. It’s good to be close to your business and be sure this critical part of your foundation is built right. Of course, no matter how intelligent you or how well you know your space, or even analytics, there may be someone else who has more experience at this. Or maybe just someone who can apply more time to this important task and do it more efficiently. Delegating this task to someone else outside your business can help overcome any bias you might bring to it as well. Who will do it?
See How I Can Help You With Your Fundraising Efforts
See How I Can Help You With Your Fundraising Efforts
2. Gather Your Data
If you are already in business, then you will want to gather your most important data and analytics to be ready to use. Organize it now to optimize your time later.
Fresh and up-to-date market research is the real meat of your analysis. Take the time to do it well.
4. Compile & Format It
Put your findings together in the right format for how you will use it.
If you delegated it to someone else, you want to review their work. If you prepared it, you’ll want an unbiased advisor to review and catch anything you missed.
A SWOT analysis is only one of the critical tools you can use when determining the viability of your venture. When you’re ready for more information about how to evaluate a business idea, check out this video I have put together.
Elements Of A SWOT Analysis
What strengths does your company have that provide an edge over your competition and moat to protect you from the future competition?
Your strengths may include:
- Resources: tangible assets, intellectual property, experience, connections, or capital
- Branding: a strong, loved, and highly valued brand
- Track record: past accomplishments, data, revenues
- Competitive advantage: profit margins, exclusive partnerships, talent
Where might your competitors be stronger than you? You can only win if you understand where you are weak as well as strong.
Weaknesses can include:
- Resources: capital, team size, industry experience, rented technology
- Competition: customer acquisition costs, long sales cycles, bigger competitors
What great opportunities are there for your venture to seize on?
This may include:
- Consumer and market changes and trends
- New industries and markets being created
- Changes in government regulations and industry rules
The only way to protect yourself, your business, and your investors and team is to identify and acknowledge the potential threats.
These may include:
- New regulations and laws
- Better funded competitors
- Capital reserves
- Natural disasters
A SWOT analysis is all about discovering and mapping out your strengths, weaknesses, opportunities, and threats so that you can do better in marketing and strategic planning, operating, fundraising, and recruiting. It is key to everything else you do. The good news is that while it certainly deserves the time to do it, and do it well, it isn’t that complicated if you follow these steps.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.