In a previous post, I mentioned that starting a business without conducting a SWOT analysis is a risk.

This analysis is very important as it will help you:

  • evaluate your readiness to start the business.
  • identify the help you need before, during and after startup
  • pinpoint the challenges you expect to face during and beyond startup.
  • see the future growth of the industry.
  • start your business the right way as you will have all the necessary information at hand.

This article expands further about SWOT analysis and gives additional reasons why you need to conduct one before startup.

Definition of SWOT

SWOT refers to Strengths, Weaknesses, Opportunities and Threats.

Strengths and Weaknesses are internal characteristics of the business and they can be changed, improved or eliminated with a bit of work.

Opportunities and Threats are found outside the business and you cannot change them; they are out of your control.


These are characteristics of your business and its owners that give you an advantage over other existing businesses.

Strengths are the things that you’re doing right and that enhance the market positioning of your business.

They include your personal and staff knowledge and experiences, unique products or services, and anything that can add value to your company (e.g copyrights, patents, specialized knowledge or skills).


These are the characteristics that place your business at a disadvantage relative to your competition. These characteristics point at the need for improvement within the organization or the people that make up the organization.

You should attempt to sort out the weaknesses as soon as possible so that you can have a higher competitive edge against your competitors.

Weaknesses include areas that need improvement or change, expertise, knowledge or equipment that you lack, lack of necessary resources that are core to your business, poor location, and not being visible in the market.

Your personal and business weaknesses have the potential to kill your business in the first year, so act on them immediately.


These are the elements that your business could exploit to its advantage.

Opportunities for improvement and growth are found in all industries, no matter the size of your business.

A careful analysis of the market environment will help you create a competitive advantage from the opportunities available in the marketplace.

As a wise business owner, you should take full advantage of all the opportunities that exist within and outside your business.

Carefully evaluate opportunities as some of them have a very short window and you may end up timing your entry wrongly and losing instead of gaining.


These are elements in the business environment that could cause trouble for your business.

Examination of current threats will help you implement counter measures before the threats become a danger to our business.

You should also examine future threats and make plans for mitigating them.

If you’re starting your business while still in employment, one of your major threats is time management because you will be serving two masters and when push comes to shove, most new business owners tend to neglect their businesses.

Other threats include, but are not limited to:

  1. Political changes: For example, starting a business during an election year in Kenya can be detrimental depending on the results of the elections.
  2. Terrorism: In recent times, terrorism has become a major threat to all businesses so you’ll need to evaluate the risk of potential terrorism-related effects on your business. For example, the tourism industry in Kenya has taken a huge beating due to terrorism and some hotels at the coast have had to close down. Other hotels took advantage of the opportunity to market to locals and ended up with booming business all year round.
  3. The economy: A downturn in the economy could mean that people start hoarding money. If your business sells luxury goods or services, you stand to struggle during such times if your marketing is not up to par.
  4. The international arena: A change in the politics or economy in first world countries tends to have ripple effects in developing countries. For example, something happening in America can have a negative effect as far as Kenya.
  5. Weather: Farming-related businesses that rely on the weather get affected when there are droughts or flooding. Such threats could lead to big losses in your business, which are detrimental to a startup business. Similarly, a tsunami warning in your area could be a huge threat to your business if you’re in the tourism industry.

Take time to work on your SWOT analysis so that you have a clear picture of the business and industry you’re getting into.

Be willing to abandon this business idea if your SWOT indicates that the business is not worthwhile or it’s going to become obsolete in the future.

Other times when you can use SWOT

  • Before creating your strategic plan for the year: Do a SWOT of the year that’s ending so that you can evaluate your market positioning and make changes in the next year’s plan.
  • When making a decision about adding a new product or service or expanding your business.
  • To evaluate your personal readiness to venture into a new business or industry (this is different from the business SWOT as it concentrates on you as the subject).

My first business taught me to never take on a new product or service without conducting a SWOT.

I thought I was taking advantage of an opportunity when I identified prepaid cards for checking share prices on the Nairobi Securities Exchange.

These cards cost a bit and the seller knew that they were going to be obsolete soon so he got rid of them in the fastest way possible – by giving a great offer.

Had I done a SWOT on the opportunity, I would have found out that the Nairobi Stock Exchange was about to provide the same information for free in a few months’ time.

So my cards were useless within a short while after purchasing a whole load of them at a ‘special offer’ and I was saddled with someone else’s dead stock at the cost of my capital!

(Image credit scottchan at Free Digital Photos).

Need help?

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Get a copy of my book 12 Weeks to Startup and create your dream business today. This self-coaching manual contains a complete business startup program that will help you identify the perfect business, conduct a thorough SWOT analysis on it (done in Week 5), and get the business started in 12 Weeks or less.

Click here to purchase your copy.


Caroline Gikonyo
Caroline Gikonyo

Caroline Gikonyo created her dream business and ran it as a solopreneur for 6 years. She then teamed up with 4 other coaches and formed Biashara 360 where she is now the Head of Coaching. As a Business Coach, she’s been helping professionals and grow successful businesses while reducing the time they spend working. You can find out more about her work at