Measure the Market with SWOT Analysis

No matter how energetic or self disciplined you are, if you don’t have a detailed and guiding plan, it’s very unlikely that you will succeed in your business. Planning is a continuous process. Plans made for yesterday’s market might not suit tomorrow’s market. That’s why before jumping into a business; it’s a must to measure and gauge the target market. One of the best ways to do this is through SWOT analysis. In this post I will discuss SWOT analysis and how you can use it for your benefit.

SWOT analysis is a planning tool used to analyze an organizations strengths, weaknesses, opportunities and threats. Actually the word SWOT is the first letter of the above mentioned four things. It helps to project what is the situation of the business/market now? What is the state of the economy and other business environmental factors? What opportunities exist to capture a profitable share of the current market? What products and customers are most profitable? And many other questions like these. The following image will explain SWOT analysis further.

I will demonstrate how to do SWOT analysis of the current market, by pretending that I’m going to launch a file sharing website (web-based business). But first let’s just point one 4 key areas of SWOT analysis.

• S or Strengths represent the strengths of your company. It is not related to any other companies in your niche. Strength depends on only you and how you lay out your company.
• W or Weaknesses represent the weaknesses of your company. This is the opposite of Strengths.
• O or Opportunities represent the areas or gaps created by your competitors, which you can utilize to make profits for your company. It doesn’t depend on how you plan or layout your company. It depends on how bad your opponents are.
• T or Threats are measured by how good your opponents are. It’s the opposite of Opportunities.

Example: SWOT Analysis Roadmap of a File-Sharing Website

1. Strengths: Is your new file sharing website something which will have the ability to attract new customers? Do you have superior speed, navigational facilities, and better looking design than your competitors? What makes you superior than your competitors?

2. Weaknesses: Is your new file sharing website lacking some features which would have been useful and appealing to your potential customers?

3. Opportunities: What can you do to make a good use of your competitors’ mistakes? For example, Rapidshare has a bug in its system. It can’t differentiate computers from the same IP range. So what happens is even if you aren’t downloading, sometimes it says that “You are downloading”. 4Shared triggers automatic downloads whenever you click on a download link which is really annoying. These are your opportunities to be careful about these mistakes and make a better file sharing system.

4. Threats: What are opponents doing which is better than you?

I hope this post was helpful to you. SWOT analysis is a very important tool for businesses growth. You should do this analysis not only before starting your business, but also every now and then to find out what’s your current status on the market.