• SWOT analysis is designed to help create strategies for businesses.Chart analysis image by Dmitriy Lesnyak from Fotolia.com
  
  Businesses need to consider all aspects of a certain problem or situation in order to properly address it. Small businesses can especially struggle with this, and managers may worry that they are forgetting some key factors in their decisions. SWOT analysis is designed to look at an idea or project and examine its chances for success, offering a more complete view and often bringing to light problems or opportunities not previously recognized.
  
  

Purpose

• SWOT analysis is used for both individuals and businesses. Individuals use SWOT to analyze their own skills, experience and abilities to judge how competent they are at their job and what chances they have in the job market. Businesses use SWOT to look at their market strategies or company concept to see how well they are doing in current business conditions and how they can improve. SWOT is also often used to examine individual projects and how easily they can be accomplished. SWOT stands for Strengths, Weaknesses, Opportunities and Threats.
  
  

Strengths

• Strengths and weaknesses are internal factors that the business must consider. Strengths refer to all the positive forces the business is currently using. Good communication, efficiency, technical programs that allow projects to be accomplished, the necessary employees--all these can be strengths. These factors tend to apply to a specific facet of the business. For instance, if the business is planning on creating a website, a common strength would be the new server the company just bought.
  
  

Weaknesses

• Weaknesses are internal factors that make it more difficult for the business to achieve its objective. This is usually a lack, whether of necessary resources, interest in a product, labor or another similar problem. Often companies struggle with costs: labor or materials may be too expensive for them to leverage enough value from their products and services.
  
  

Opportunities

• Opportunities and threats are both outside factors that the business must consider. Opportunities are outside advantages the business has not yet used in its favor. These are often unreached consumer markets, methods of advertising that are do-able but have not yet been attempted, or contacts with other businesses and organizations that have not yet been made.
  
  

Threats

• Threats are outside forces that negatively impact the business. Usually, threats are competition, other businesses that can sell similar products or services more easily. Threats may also be sudden market changes, unfavorable loan conditions or other economic factors. Sometimes customers themselves can be threats as can governments and new technology.