Doing a SWOT analysis that centers on direct and indirect competitors can reveal new opportunities for your small business and strengthen plans for growth this year.

If you've conducted any type of SWOT then you understand how effective the method can be as a guide through the good and bad — Strengths, Weaknesses, Threats — to uncover the Opportunities for your company. 

When you integrate a SWOT with a competitor analysis, you'll "illuminate new paths, potential challenges before they arise, and allow for strategic pivots that align better with the market dynamics," exclaims a post by an entrepreneurial support organization (ESO) in San Antonio.

Understanding your business's weaknesses and threats prepares you to withstand economic shocks or shifts in market preferences, says the ESO blog.

"Conversely, by studying competitors, a company can spot successful strategies and perhaps avoid others that have led to failures."

Here are 4 tips on using a SWOT analysis to get a better view of how your small business stacks up against the competition and ways to win more customers and sales.

Seek Out Reviews on Competitors

Scour social media and other sites to find out what customers are saying about your competitors — for specifics on their strengths and weaknesses.

Whether they're positive or negative, customer reviews provide valuable information for your SWOT analysis.

"Analyzing these reviews can provide actionable feedback on improving your products or services and delivering a superior solution to your target audience," says a post by SCORE, the business mentoring organization.

Aim at their Weaknesses

As part of your SWOT analysis, identify competitor weaknesses and brainstorm ways your company can turn them to your advantage.

Suppose you discover weaknesses in areas where your small business already shines, fantastic. Make sure they're on your SWOT list of Strengths and start spreading the word asap — you need a marketing strategy that boasts this competitive edge.   

However, if you find competitors' shortcomings in areas where your small business falls short, then you know where to step up efforts for improvements. Better yet, map out actionable steps to turn a particular Weakness into your Strength and Opportunity.

Review Differentiators 

A SWOT that focuses on competitors is the perfect opportunity to take a fresh look at your company's Unique Selling Propositions or USPs.

"Your USP sets you apart from the competition – it's the compelling reason customers choose your business over others," explains a post on the SCORE website. 

Even if you outlined your USPs when you first started your business, it's time to take another look, see if it still holds true against current-day competitors and industry conditions.

"Whether it's unrivaled quality, exceptional service or innovative features, your USP should form the cornerstone of your business strategy," says SCORE.

Identify Competitor Strengths

Identifying your competitor's strengths could lead you to a better understanding of the internal and external weaknesses of your small business.

For example, check out your competitor's website — is it more user-friendly or aesthetically appealing than yours? If so, identify where your website falls short in comparison, whether it's a functionality issue or a dated design, and give it the attention it needs asap.

Retailers and other businesses with a physical location should also look at their nearest competitors' on-site strengths, any tactics that successfully draws customers inside their shop, such as posting weekly menus and/or promotions outside for passers-by.

If you don't have a competitor in your town, expand your search to include nearby direct competitors, and take a look at secondary or substitute competitors in your area.

"Many entrepreneurs operate based on preconceived ideas about their competitors and market landscape, but those ideas may not be accurate or may be out of date," says Mallika Kazim, senior business advisor at BDC.

"Challenge your assumptions because the data changes all the time," says a blog by Kazim on the bank's website. "Don't wait until a competitor launches a new product before changing your strategy, otherwise you might end up in a reactive position to market changes."

To learn more about doing competitive research, see these tips. Also, here's a good sample list of internal and external questions for a small business SWOT analysis.