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The most powerful tool for a startup is the mind of the founder. With the right tools at the ready a founder can transform strategies toward success in ways big companies can only dream about. One of the most important sections of the business plan is the SWOTT framework. SWOTT is a tool used by companies to analyze internal and external areas that relate to Strengths, Weaknesses, Opportunities, Threats, and Trends. Analyzing a business through these lenses helps a founder grow their business by focusing on areas that need the most attention.
Understanding your strengths are important for a startup, particularly with limited resources because it directs you to areas of focus for your business. Any other areas might just be clutter. Strategic decision-making becomes simpler when you view your problems and goals in the context of your strengths. A company can begin to shine when both customers and employees experience a businesses’ strengths.
For a startup, being realistic about weakness is perhaps the most important idea to understand about the company. It is in these areas of business that refinement can take place. Is the business putting a high amount of spending into its weakest areas rather than strengths? Has the core area of business shown to be a weakness? Being practical and tough about weaknesses will help solve business problems and spark dramatic positive change.
Opportunities are signals for positioning company resources to attract and retain new business. Don’t forget, opportunities can take on many forms including, new market trends, consumer spending shifts, partnerships, new locations, and even the hiring of a skilled employee. Doing SWOTT analysis in order gives a good understanding of whether these opportunities fall into your strengths or weaknesses making this a critical factor in the success of the analysis.
Threats are particularly troubling for a startup because they often cannot absorb large failures in one or more areas. Some threats can be quite devastating if not caught early and understood completely. Threats may come in the market shifting away from the business or a competitor changing tactics. Threats from the business may also be internal through unskilled staff in areas of strength or ineffective business processes. The important take-away from threat analysis is finding and forecasting threats early. Then develop a strategy to see the company through the challenges. The most savvy businesses find a way to turn threats into opportunities.
Trend analysis is important for a business because it allows a business to be proactive to internal or external changes. This proactive analysis of trends ties SWOTT together by allowing a business to spot potential areas of market growth in strengths, weaknesses, opportunities, and threats. The most successful and growth-oriented businesses are always looking into the future for trends, avoiding pitfalls and finding advantages their competitors haven’t.
By focusing on SWOTT’s five areas of business, it’s easy to see why even a quick assessment can have enormous positive results on small business resources. SWOTT analysis helps the business focus on the most important areas for success while staying aware and proactive of potential problems and valuable opportunities.