Reasons Why SWOT Analysis is Essential for Your Online Business

Understanding the strengths, weaknesses, opportunities, and threats of a business is crucial to any type of business, including an online business. What is SWOT Analysis? What role does it play in an online business world?

SWOT stands for “strengths, weaknesses, opportunities, and threats”. SWOT Analysis helps you build business strategy using the quadrants – the strengths and weaknesses are classified as the internal factors, while the opportunities and threats are the external factors.


It is a key advantage over your competitors or the areas where your business is excelling. Do you have better services or products than your competitors? Do you offer better customer service than the others?


It is the disadvantages of your business over your competitors or the areas where you might be lacking. Weaknesses of a business are one of the most less tackled areas when building business strategies – no one likes to know what they are lacking. However, identifying your weaknesses will help you improve your marketing strategy, meet customer expectations, keep your workforce productive, and more.


These are external factors that are available for your business to grow. Opportunities are potentials that will help shift your business to a better angle. For instance, the changes in trend provide better opportunities for your business, only if you take advantage of them.


This final dimension in SWOT makes you evaluate potential impediments to achieving your business goals. What are the actions or situations that will possibly bring your business down? List down possible threats that can cause problems in the future and to have a well-thought solution beforehand.

Is it really necessary to create a SWOT analysis for an online business too? Yes, it is. Check these reasons why creating a SWOT analysis is also essential for your online business:

Reason #1: It is a universal method in business decision-making

SWOT analysis is conducted to obtain smart decisions, especially when you are feeling in conflict choosing directions for business development; for instance:

  • Making changes in the business.
  • Setting business priorities.
  • Getting recommendations when building business strategies.

SWOT analysis is used in both short-term and long-term strategic planning. So, if you think you won’t need this in your online business for short-term decision-making, you got it all wrong.

Reason #2: Used in comprehensive business assessment

SWOT allows you to estimate the following factors:

  • The strength of your business (both internal and external factors).
  • The weaknesses of your business activities, causing discrepancies in production and sales.
  • To achieve strategic goals.
  • To identify threats that can impede your business’ growth.

#3: To determine the profitability

SWOT analysis is used to determine the profitability of your business. Also, it helps solve problems that obstruct profits. Is your strategy effective in gaining profits? Is your location causing low sales? Do you have low business production, causing negative returns? Do you have a low online presence, causing low qualified traffic to your website?

Some people may think that doing online business is an informal type of business; you should not think likewise. Similar to traditional street-side businesses, to have a successful online business, you need to have a solid business plan and SWOT analysis. Also, it requires your time, effort, and money.