Starting a business without conducting a SWOT analysis is a risk. I know it at a personal level because I started my first business without one.

While I did a lot of research for that business, I didn’t examine potential pitfalls in the startup phase well. I thought that knowing exactly what I was going to do was enough. It wasn’t!

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

What is a SWOT Analysis?

SWOT refers to Strengths, Weaknesses, Opportunities and Threats.

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

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


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.
  • 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. They indicate the need for improvement within the organization or its people.

You should attempt to sort out the weaknesses as soon as possible. as this will give you a competitive edge against your competitors.

Weaknesses include:

  • Areas that need improvement or change.
  • Lack of expertise, knowledge or equipment.
  • Lack of necessary resources that are core to your business.
  • Poor location.
  • Not being visible in the marketplace.

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. If you’re not careful, you may end up timing your entry wrongly so you lose instead of gaining.



These are elements in the business environment that could cause trouble for your business. These elements are outside your control, but you can prepare and plan for them.

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

You should also examine potential 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. When push comes to shove, you’ll be more likely to give attention to your job at the expense of the business.

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: Terrorism has become a major threat to all industries. So you’ll need to evaluate the risk of potential terrorism-related effects on your business. For example, the tourism industry in Kenya takes a beating each time Kenya is put on the watch list or when we have terror attacks. Some hotels and tourism-related businesses end up closing down. Others have taken advantage of the opportunity to market to locals and gotten 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 can struggle during such times if you’re not prepared.
  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 ready 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.

You can also use a SWOT analysis in the following instances:

  • Before creating your strategic plan for the year: Use SWOT to 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. Note that this is different from the business SWOT as it concentrates on you as the subject.

Importance of SWOT analysis

SWOT analysis is very important because 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.

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

I thought I had an advantage over similar businesses when I identified prepaid cards for checking share prices on the Nairobi Securities Exchange.

These cards were not cheap. Also, the seller knew that they were going to be obsolete soon, but I didn’t. So he got rid of them in the fastest way possible – by giving a great offer.

Had I done a SWOT on this opportunity, I would have learnt 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’. I was saddled with someone else’s dead stock at the cost of my capital!

I learnt my lesson and have used SWOT analysis before startup since then.

If you’re thinking of starting a business, ensure that you first conduct a thorough SWOT analysis. While the process may take time, it will save you time, money, energy and stress during and after startup.

(Images courtesy of: Pixabay and Unsplash)


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1. Identify the perfect business for you.
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Caroline Gikonyo
Caroline Gikonyo

Caroline Gikonyo is a Life and Business Coach at Biashara 360. She's an avid blogger and also oversees our content creation. This ensures that we give our readers quality and well researched information and tips.

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