Before venturing into any business, we must always do some sort of risk analysis and calculations. The most fundamental method which most people adopt is to use the SWOT analysis to determine the viability of the venture.
SWOT, which stands for Strengths, Weaknesses, Opportunities and Threats, helps us to audit the overall strength of a business in an industry.
Strength
You must identify the strengths of your company which can stand out above the rest. What makes you or your company different from other competitors and why customers would want to buy from you. For startups, one of the key strengths they can stand against well established competitors is to provide more customized services and exercise flexibility towards customers. After recognising the various strengths, you must fully capitalize on them.
Weaknesses
You must identify the weaknesses of your company which may be lose its competitive edge against others. Examples of weaknesses of new startups are the lack of products and quality control or the lack of customer references. No matter how small they are, steps must be taken to improve on the weaknesses and eventually turn them into strengths.
Opportunities
This usually refers more towards external influences. For example, change in lifestyle of people may create a new demand for certain products or services. Some businesses like retail are location influenced and people can pay high premiums on rental to create great business opportunities for themselves.
Threats
Threats are external factors which may cause negative impact on the business. Examples are like change of government rules or policies, competitors launching a new product, or behavioural change in consumer.
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