Invariably, any strategic analysis of a business, particularly where lending banks are concerned, must contain a SWOT analysis where the strengths and weaknesses of the business are listed (i.e. the internal factors staff and management skills, gaps which need filling, etc.), and the opportunities and threats (the external factors) are identified, and frequently underestimated. The SWOT analysis can be a very valuable and useful tool, but it must be used in a positive and productive manner. The strengths and weaknesses should really reflect the answers to the questions that have been posed in the analysis of the internal environment, and similarly the opportunities and threats will relate to issues which have been identified in the analyses of the market and external environments.

Frequently, the SWOT is treated superficially and is insufficiently checked or validated, therein wasting a useful opportunity simply going through the motions of preparing a SWOT may keep the bank manager happy but it does not really do justice to the potential future of the business. Ideally, the person carrying out the analysis should ask another person (preferably one with an objective insight into the business) to carry out an independent analysis so that the results of the two can be compared, evaluated and if necessary mediated. This is particularly important when the SWOT analysis is being carried out to assess the skills of the owner-managers and key staff. It is all too easy to overestimate management capabilities, and to underestimate weaknesses.