Developed in the 1960s to help fortune 500 companies create and execute long-term plans, the SWOT analysis is still one of the most straightforward tools used to evaluate business strategy. It has become a popular go-to when major decisions need to be made, and when it may be time for a new direction. More comprehensive than creating a list of pros and cons, a SWOT analysis can help businesses catch details that could otherwise be overlooked when using a straight good/bad dichotomy.

In case you are not familiar with the SWOT analysis definition, it is an evaluation of your company’s strengths and weaknesses, as well as the opportunities and threats you should consider when making any plans. It is a good idea to run a SWOT analysis with your company on a regular basis so you can evaluate any developments in your industry and changes with your business.

Creating Your First SWOT Analysis

The best SWOT analyses are thorough and objective, which can be a challenge if you are doing this for a business you have poured your own sweat into. Following are some tips to help you get the most out of this exercise:

1. Try to step outside of your emotional attachments (you can use those later when developing a plan), and look at your company as a consultant from the outside.
2. Before you even get started, look at this questionnaire from SCORE and add any other questions that may be pertinent to your company’s operations or marketing strategy.
3. Use sticky notes to answer the questions so you can easily reorganize and rearrange your thoughts.
4. Ask for input from other departments in your business.
5. Ask for input from trusted colleagues, friends, and family.
6. Do not dismiss anything.

Gather all the information you need and organize it into its respective categories. Strengths and weaknesses are factors internal to your business that affect public perception as well as your day-to-day operations. Opportunities and threats are external factors that also affect day-to-day operations as well as the way your business interacts with the public, and what kinds of products and services it offers.

Once you have collected all the information you need, it is time to put it all together into a neat and easy-to-read template. Canva offers plenty of excellent free templates that are simple to use, and you can find many more just by doing a search for free SWOT analysis templates. Pick the one that makes the most sense for you and your business.

At this point it may seem like overkill to keep reorganizing the information you have gathered, but you are in the final stage. Shifting the information around helps you become intimately familiar with what you need to keep and what you can discard. Do not include anything that doesn’t seem pertinent in the final draft of your template, but do hang on to the sticky notes so you can refer back to them if necessary.

Spend Some Time Reflecting

Reflect on your finished results and see if there are any patterns that jump out at you, or anything that glaringly needs attention. What are the most prominent themes in your SWOT analysis? Do you have excellent customer service and new opportunities to expand on that even further? Are you just now catching a problem with a product you offer, or are you struggling to maintain supply? If something requires your immediate attention, address it now.

Walk Away

Spend some time away from your company’s SWOT analysis so you can clear your mind. Ideally, you will not come back to this exercise for at least a week. If you are more pressed for time, then at least try to give yourself a day or two in between this and the next part.

Create a SWOT Analysis For Your Competition

Hopefully you have had some time to clear your head of your company’s SWOT analysis so that it does not color what you need to do next. Additionally, if you have not thoroughly evaluated who your competition is, now is the time. You need to make sure you are comparing yourself to another company that offers the same products and services, within the same categories, and at the same level of development.

If your business is a local bakery that specializes in birthday cakes, your competitors do not include bakeries that specialize in doughnuts or the Walmart bakery. Doubling down on your company’s identity as a local bakery specializing in birthday cakes may help you in your strategy competing with these other businesses, but you first need to focus on your direct competition, not your indirect competition.

Take all the steps you took with your own SWOT analysis, and try to remain as objective as possible. Ask others for help and look for input from other departments within your business. Then, walk away. Give everything time to process.

Evaluate

Once you have completed SWOT analyses for both your business and your competition then spent some time away, you should be able to make well-informed decisions about what to do next. Where is your competition lacking in service? What do they either provide inadequately or not at all? Where do your strengths overlap with their weaknesses? What threats do they pose to your business and where might you be able to shore up your inadequacies?

Use the information you gathered to see where all the overlaps and all the gaps between your business and your competition are, then start strengthening your weaknesses. Use the strengths your business has to fill in those gaps where service from your competitors is lacking, and keep building on your brand identity to ensure your company rises above the places you and your competitor overlap. When things start feeling stuck or stale, start the process over from step one.