Should You Use PEST or SWOT Analysis for Your Business

The top two buzzwords in the business assessment game are PEST and SWOT. These acronyms are hyped as the crowning jewel of achievement in the bid to analyze businesses. For a first-time small business owner, however, it can be confusing to know how to use these two powerful tools. If you know that you need to run an assessment, but you don’t know which one, this explanation should make it easier for you to figure it out.

What’s the Scale of Your Analysis?

PEST and SWOT analysis are two very similar assessments in style. They break down the external world of business into steps for you to research, consider, and write about. Each one will help shape your business plan from the outset, and you should consider doing annual assessments to see if you’re still on track with all that you want to accomplish. However, these two tests deal with two very different scopes.PEST analysis is generally the analysis that businesses should complete first, according to It deals with the world in general, and stands for political, economic, social, and technological factors. These are things that affect not only your business, but the entire industry you work for. Expect to spend more than a few hours reading up on it in business journals before you complete this analysis.

SWOT analysis also impacts your business, but it’s applied to your competitors. (Though you can modify it to fit your business, if you want to get an outsider’s perspective on how you’re doing.) SWOT means a businesses strengths, weaknesses, opportunities, and threats. If there’s one online store that you’re always butting heads with, for example, you would apply this analysis to figure out where they have the edge over you, and what you might target if you want to win customers away from them.

Putting Yourself in Your Rival’s Shoes

Now that you know the scale of your interests, you can use the SWOT to figure out how to go after a competitor. If the market’s just not big enough for the both of you, you need to go into your marketing campaign knowing that you either need to take conversion away from your competitor or create whole new markets for yourself.

If you apply this to yourself, however, you can also get a sense of what your competition might do to get to you, as it will reveal your business’s weaknesses as a rival might see them. This is a powerful tool that will let you turn your business into a sleek, streamlined profit machine.

Looking at the Way the World Works

If you need to know the lay of the land on an industry or nationwide scale, PEST is your best friend. You can see where you stack up with the rest of the businesses when it comes to weathering the storms that any industry has. If you see a general lack of action on your part in one of the major areas, such as not enough businesses in your industry are taking full advantage of the social side of social media, you can zero in on these opportunities to stand out from the pack. It also helps you plan in advance if you can see that lean times are going to be coming for everyone.

Once you know the scale of what you’re trying to achieve with this analysis, you can choose between SWOT and PEST. They are both incredibly valuable tools, but they have very different end results. Pick the one that’s best for your business today, and save the other for use to further your goals tomorrow.

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