SWOT stands for Strength, Weaknesses, Opportunities and Threats.

SWOT analysis is a quick way for an entrepreneur to define what the strengths, weaknesses, opportunities and threats are against his/her business.  It is a quick way to assess whether or not your have a viable business idea.  It examines the internal and external aspects of the business that could negatively or positively impact it.

Every entrepreneur should conduct a swot analysis of their enterprise.  It is important to know the SWOT analysis of your business when you approach investors to raise money to finance your small business.  Investors are likely to ask what do you see as your strengths and weaknesses and where do you see opportunities for your products.

To do the SWOT analysis list 3-5 items for each category.  Approach each area as follows:

Strength:  Strength should refer to factors internal to the company that highlight the advantages, capabilities, resources, assets, and people you have that is a great benefit.  Some examples include pricing, cost, management team, skills, production capability, etc.

Weaknesses:  Weaknesses should refer to factors internal to the company that highlight vulnerabilities in areas such as, supply chain, cash flow, credit record, morale, reputation, leadership, etc.

Opportunities:  Opportunities should refer to factors external to the company that the company can capitalize on such as, trends, market advantage, industry leader, new market, niche market, etc.

Threats:  Threats should refer to factors external to the company that could pose a threat to the business such as, environmental, legal, political, competition, etc.

Here are some examples of SWOT analysis:

Strengths:

- Strong leadership team

- We're the only one with this product

- Market experience

- The most competitive price in the industry

Weaknesses:

- Lack of funding

- Must hire new personnel & train them

- Low cash flow

- Average credit record

Opportunities:

- First to market

- Become industry leader

- Become a must have safety item

Threats:

- Long production & distribution timeline

- New environmental laws

- Opposition to change

- Will require approval state-by- state